The euro, pound, and other risk assets managed to hold their ground against the US dollar yesterday, despite few reasons for this.

Yesterday, the revised US GDP growth data for the second quarter was released, showing improvement. The economy grew by 3.3%, compared to the preliminary estimate of 3.0%. Surprisingly, the dollar completely ignored this data, and the euro, pound, and Japanese yen even managed to rise slightly.

Traders are more focused on waiting for further signals from the Federal Reserve regarding future monetary policy. Markets are closely watching for any hints about when the Fed might start cutting interest rates, which would have a significant impact on the dollar's exchange rate. The recent dovish tone in interviews from several Fed officials further convinces the market that such steps may become real in the near future.

Today, economists and traders are eagerly awaiting new data on the German economy, which could provide insight into the health of the eurozone economy. Retail sales figures are significant, as they reflect consumer spending—a key driver of economic growth. A decline in these indicators may signal economic weakening, whereas growth would point to resilience. Unemployment data will also be in focus. An increase in the number of unemployed individuals and a higher unemployment rate may signal labor market problems, which in turn puts pressure on consumer spending. Conversely, a decrease would be seen as positive for the economy.

Of course, the key indicator will be the Consumer Price Index. An acceleration in inflation could prompt the European Central Bank to maintain its wait-and-see approach to interest rates, potentially hindering economic growth.

There are once again no data releases from the UK today, so I expect renewed pressure on the pound in the first half of the day.

If the data matches economists' expectations, it's better to use a Mean Reversion strategy. If the data turns out to be significantly higher or lower than expected, it's best to use a Momentum strategy.

Momentum Strategy (Breakout):

EUR/USD

• Buying on a breakout above 1.1680 could drive the euro up towards 1.1700 and 1.1740
• Selling on a breakout below 1.1655 could push the euro down towards 1.1630 and 1.1600

GBP/USD

• Buying on a breakout above 1.3515 could send the pound up towards 1.3550 and 1.3580
• Selling on a breakout below 1.3485 could send the pound down towards 1.3460 and 1.3420

USD/JPY

• Buying on a breakout above 147.20 could drive the dollar up towards 147.50 and 147.90
• Selling on a breakout below 146.80 could push the dollar down towards 146.50 and 146.30

Mean Reversion Strategy (Pullbacks):

EUR/USD

• I will look for sells after a failed breakout above 1.1695 upon a return below this level
• I will look for buys after a failed breakout below 1.1648 upon a return above this level

GBP/USD

• I will look for sells after a failed breakout above 1.3516 upon a return below this level
• I will look for buys after a failed breakout below 1.3492 upon a return above this level

AUD/USD

• I will look for sells after a failed breakout above 0.6549 upon a return below this level
• I will look for buys after a failed breakout below 0.6523 upon a return above this level

USD/CAD

• I will look for sells after a failed breakout above 1.3758 upon a return below this level
• I will look for buys after a failed breakout below 1.3741 upon a return above this level