The dollar is regaining attractiveness as positive news regarding the peace agreement is overshadowed by further attacks from U.S. military forces on Iranian ships and infrastructure.
Today, the U.S. dollar showed a strong increase following alarming news about American airstrikes on Iranian vessels in the Strait of Hormuz and other strategic sites in Iran. These actions, which evidently escalate tensions, pose a serious threat to the further development of the peace agreement, which was previously thought to be under negotiation between the United States and the Islamic Republic of Iran. As a result of this geopolitical uncertainty, traders are inclined to prefer safer assets, traditionally including the U.S. dollar.
Regarding data, there are no fundamental data coming from the Eurozone today, which inevitably shifts traders' focus to other, more significant events. Primarily, this concerns the European Central Bank's report on financial stability. Many analysts believe this document could set the tone for further developments in the currency market in the short term. It is expected that the forecasts presented in the report will sound somewhat pessimistic. Weak indicators and cautious statements from the ECB may exert significant pressure on the euro.
As for UK macroeconomic data, today is expected to be relatively calm, at least in the first half of the day. Traders' attention will be on the retail sales report from the Confederation of British Industry. This indicator is traditionally considered one of the leading indicators of the British economy, responding sensitively to changes in consumer demand. If the published data turns out worse than analysts' expectations or shows a downward trend, it could exert additional, substantial pressure on the British pound.
If the data aligns with economists' expectations, it's better to act based on the Mean Reversion strategy. If the data is significantly higher or lower than economists' forecasts, it's best to use the Momentum strategy.
Momentum Strategy (Breakout):
For the EUR/USD Pair
- Buy on breakout above 1.1650, aiming for growth towards 1.1678 and 1.1698;
- Sell on breakout below 1.1630, aiming for a drop towards 1.1609 and 1.1585;
For the GBP/USD Pair
- Buy on breakout above 1.3490, aiming for growth towards 1.3529 and 1.3557;
- Sell on breakout below 1.3465, aiming for a drop towards 1.3440 and 1.3390;
For the USD/JPY Pair
- Buy on breakout above 159.15, aiming for growth towards 159.40 and 159.65;
- Sell on breakout below 158.80, aiming for a drop towards 158.55 and 158.25;
Mean Reversion Strategy (Retracement):
For the EUR/USD Pair
- Look to sell after a failed breakout above 1.1641 if the price returns below this level;
- Look to buy after a failed breakout above 1.1621 if the price returns to this level;
For the GBP/USD Pair
- Look to sell after a failed breakout above 1.3497 if the price returns below this level;
- Look to buy after a failed breakout above 1.3467 if the price returns to this level;
For the AUD/USD Pair
- Look to sell after a failed breakout above 0.7180 if the price returns below this level;
- Look to buy after a failed breakout above 0.7156 if the price returns to this level;
For the USD/CAD Pair
- Look to sell after a failed breakout above 1.3818 if the price returns below this level;
- Look to buy after a failed breakout above 1.3801 if the price returns to this level;
