The British pound was traded today using the Mean Reversion strategy, while the euro and the Australian dollar performed well under the Momentum strategy.
Recently, the euro has shown steady growth during the first half of the day. Today, encouraging data on Services PMI for eurozone countries has already created a positive backdrop. These indicators, reflecting the state of the economy, inspire investor confidence as they point to a potential recovery in the services sector. Strong PMI readings are typically interpreted as a sign of healthy economic activity, making euro-denominated assets more attractive. On the other hand, the complete absence of new alarming news from the United States regarding a potential escalation around Iran is also supporting the euro. Tensions in the Middle East are a risk factor for the global economy, contributing to rising energy prices and increasing uncertainty.
In the second half of the day, market participants' attention will be focused on several important macroeconomic data releases that could significantly impact asset price movements. The key event will be the release of the weekly ADP report. This indicator provides a preliminary view of the health of the private sector and its job creation dynamics. Alongside labor market data, figures reflecting durable goods orders will also be published. This indicator serves as an important gauge of manufacturing activity and corporate investment spending. An increase in orders suggests rising demand for products, which positively affects the outlook for the manufacturing sector and supports overall economic growth.
Additional importance will be given to remarks by Federal Reserve Open Market Committee member Austan D. Goolsbee. In the context of the current economic environment and uncertainty regarding the Fed's next steps, communication from policymakers is of primary importance.
If the data comes in strong, I will rely on the Momentum strategy. If there is no market reaction to the data, I will continue to use the Mean Reversion strategy.
Momentum Strategy (Breakout) for the Second Half of the Day
For EUR/USD:
- Buying on a breakout above 1.1575 may lead to euro growth toward 1.1595 and 1.1628;
- Selling on a breakout below 1.1550 may lead to a decline toward 1.1530 and 1.1490;
For GBP/USD:
- Buying on a breakout above 1.3280 may lead to pound growth toward 1.3315 and 1.3345;
- Selling on a breakout below 1.3249 may lead to a decline toward 1.3212 and 1.3182;
For USD/JPY:
- Buying on a breakout above 159.74 may lead to dollar growth toward 159.94 and 160.21;
- Selling on a breakout below 159.53 may lead to a decline toward 159.29 and 159.09;
Mean Reversion Strategy (Pullback) for the Second Half of the Day
For EUR/USD:
- I will look for selling opportunities after a false breakout above 1.1585, on a return below this level;
- I will look for buying opportunities after a false breakout below 1.1543, on a return to this level;
For GBP/USD:
- I will look for selling opportunities after a false breakout above 1.3289, on a return below this level;
- I will look for buying opportunities after a false breakout below 1.3237, on a return to this level;
For AUD/USD:
- I will look for selling opportunities after a false breakout above 0.6959, on a return below this level;
- I will look for buying opportunities after a false breakout below 0.6920, on a return to this level;
For USD/CAD:
- I will look for selling opportunities after a false breakout above 1.3930, on a return below this level;
- I will look for buying opportunities after a false breakout below 1.3907, on a return to this level;
