FX.co ★ Level and Target Adjustments for the U.S. Session – May 1

The British pound, the euro, and the Australian dollar were traded today using a Mean Reversion strategy. I traded the Japanese yen using a Momentum strategy, taking into account its currency interventions.

In the second half of the day, important data on the U.S. ISM Manufacturing Index is expected. These figures are one of the key indicators of the state of the American economy, reflecting activity in the manufacturing sector. Particular attention will be focused on the index value for April this year. If the indicator exceeds forecasts or shows steady growth, it will be perceived by markets as a positive signal. Strong manufacturing activity is traditionally associated with solid economic expansion, which in turn increases the attractiveness of the U.S. dollar. Improved sentiment regarding the U.S. economy could trigger capital inflows into the dollar. If the data is weak, pressure on the U.S. dollar will return, leading to fairly strong gains in risk assets by the end of the week.

In the case of strong data, I will rely on implementing 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 1.1750 may lead to euro growth toward 1.1773 and 1.1793;
• Selling on a breakout below 1.1730 may lead to a decline toward 1.1709 and 1.1685;

For GBP/USD:

• Buying on a breakout above 1.3619 may lead to pound growth toward 1.3650 and 1.3683;
• Selling on a breakout below 1.3587 may lead to a decline toward 1.3565 and 1.3537;

For USD/JPY:

• Buying on a breakout above 156.73 may lead to dollar growth toward 157.05 and 157.40;
• Selling on a breakout below 156.33 may lead to a sell-off toward 155.96 and 155.56;

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 1.1758, with a return below this level;
• I will look for buying opportunities after a false breakout below 1.1719, with a return to this level;

For GBP/USD:

• I will look for selling opportunities after a false breakout above 1.3624, with a return below this level;
• I will look for buying opportunities after a false breakout below 1.3576, with a return to this level;

For AUD/USD:

• I will look for selling opportunities after a false breakout above 0.7208, with a return below this level;
• I will look for buying opportunities after a false breakout below 0.7180, with a return to this level;

For USD/CAD:

• I will look for selling opportunities after a false breakout above 1.3592, with a return below this level;
• I will look for buying opportunities after a false breakout below 1.3563, with a return to this level;