Given the low market volatility, neither the euro nor the British pound could be traded today using the Mean Reversion strategy. Using the Momentum strategy, I traded the Japanese yen.
The lack of important statistics from the eurozone affected the volatility of the EUR/USD pair. Traders, deprived of key indicators that determine market direction, were forced to rely on less significant data, which resulted only in a modest rise of the euro.
Ahead of us are highly significant statistical reports that could substantially influence the future dynamics of the dollar. First and foremost, this includes the weekly U.S. initial jobless claims data. This indicator typically reacts very sensitively to even minor changes in the economy, reflecting the condition of the labor market. Any deviations from forecast values may trigger noticeable movements in U.S. dollar pairs.
Equally important are indicators such as the Philadelphia Fed Manufacturing Index and the trade balance. The former will provide insight into the condition of the manufacturing sector in one of America's key industrial regions, revealing trends toward growth or decline. The latter will allow an assessment of the country's trade balance, which is directly related to the national currency's exchange rate and overall economic health.
In addition, upcoming speeches by FOMC members Raphael Bostic and Neel Kashkari should be taken into account. Their comments regarding the current economic situation, inflation trends, and possible further monetary policy actions will be closely watched by investors.
If the statistics come in strong, I will rely on the Momentum strategy. If there is no market reaction to the data, I will continue using the Mean Reversion strategy.
Momentum Strategy (Breakout) for the Second Half of the Day
For EUR/USD:
Buying on a breakout above 1.1807 may lead to a rise toward 1.1825 and 1.1848.Selling on a breakout below 1.1788 may lead to a decline toward 1.1769 and 1.1734.For GBP/USD:
Buying on a breakout above 1.3515 may lead to a rise toward 1.3545 and 1.3577.Selling on a breakout below 1.3480 may lead to a decline toward 1.3457 and 1.3432.For USD/JPY:
Buying on a breakout above 154.95 may lead to a rise toward 155.32 and 155.67.Selling on a breakout below 154.67 may lead to a decline toward 154.35 and 154.12.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 1.1814, followed by a return below this level.I will look for buying opportunities after a false breakout below 1.1785, followed by a return to this level.For GBP/USD:
I will look for selling opportunities after a false breakout above 1.3527, followed by a return below this level.I will look for buying opportunities after a false breakout below 1.3475, followed by a return to this level.For AUD/USD:
I will look for selling opportunities after a false breakout above 0.7088, followed by a return below this level.I will look for buying opportunities after a false breakout below 0.7048, followed by a return to this level.For USD/CAD:
I will look for selling opportunities after a false breakout above 1.3695, followed by a return below this level.I will look for buying opportunities after a false breakout below 1.3654, followed by a return to this level.