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Demand for risky assets persisted following weak data on U.S. economic growth. Only statements from Donald Trump regarding trade agreements helped the dollar partially recover its position by the end of the day.
The euro and the British pound demonstrated resilience amid the prevailing uncertainty in global markets. Investors interpreted the slowdown in U.S. economic growth as a signal that the Federal Reserve might resort to an earlier interest rate cut, which, in turn, reduced the dollar's attractiveness.
However, the euro's growth is restrained by several factors. First, the eurozone economy also shows signs of slowing. Although inflation is declining, it remains high nonetheless. The outlook for economic growth is clouded due to the trade tariffs that the U.S. has already imposed on several EU goods. Second, geopolitical tensions still linger.
Today promises to be eventful in terms of macroeconomic data for the euro. Traders are eagerly awaiting the release of consumer price index (CPI) data from France and Spain, as well as consumer spending figures from France. These indicators are crucial for assessing the health of the European economy and may have a significant impact on the euro's exchange rate.
The Consumer Price Index (CPI) serves as a barometer of inflation, measuring changes in the cost of a basket of goods and services purchased by households. High inflation pressures consumer purchasing power and may force the European Central Bank (ECB) to act more cautiously regarding interest rates.
Changes in consumer spending, in turn, reflect consumer sentiment and willingness to spend money. Rising spending signals confidence in the economic outlook and supports growth, while a decline is a red flag, pointing to potential economic problems.
Thus, only positive results across all three indicators could provide significant support for the euro.
There are no macroeconomic releases scheduled for the UK today, so significant growth of the GBP/USD pair is not expected.
If the data aligns with economists' expectations, it is advisable to rely on the Mean Reversion strategy. If the data turns out to be significantly above or below forecasts, the Momentum strategy would be more effective.
Buying on a breakout above 1.1710 could lead to a rise in the euro toward 1.1750 and 1.1775
Selling on a breakout below 1.1680 could lead to a decline in the euro toward 1.1630 and 1.1585
Buying on a breakout above 1.3750 could lead to a rise in the pound toward 1.3785 and 1.3818
Selling on a breakout below 1.3715 could lead to a decline in the pound toward 1.3675 and 1.3630
Buying on a breakout above 144.55 could lead to a rise in the dollar toward 144.90 and 145.30
Selling on a breakout below 144.20 could trigger a sell-off in the dollar toward 143.70 and 143.46
I will look to sell after a failed breakout above 1.1716 on a return below this level
I will look to buy after a failed breakout below 1.1677 on a return above this level
I will look to sell after a failed breakout above 1.3757 on a return below this level
I will look to buy after a failed breakout below 1.3710 on a return above this level
I will look to sell after a failed breakout above 0.6570 on a return below this level
I will look to buy after a failed breakout below 0.6535 on a return above this level
I will look to sell after a failed breakout above 1.3658 on a return below this level
I will look to buy after a failed breakout below 1.3627 on a return above this level