Despite favorable conditions for growth, the U.S. dollar remains unnoticed by market participants. A fairly positive ADP report regarding the U.S. labor market only slightly helped the dollar strengthen its position yesterday. Traders seemed to prefer waiting for more official employment data from the Labor Department; however, it will take a while before the next report is released, likely due to the ongoing U.S. government shutdown.

Strong labor market indicators could prompt the Federal Reserve to adopt a more hawkish policy, as mentioned last week by Fed Chair Jerome Powell.

Today, several reports are expected in the first half of the day, including changes in industrial production in Germany, changes in the number of employed in the private sector in France, and changes in retail sales in the Eurozone. These data will clarify the current state of the European economy and determine traders' sentiments towards the euro. In particular, the German industrial production report will be a key indicator, as it reflects the dynamics of the Eurozone's largest economy and thus significantly influences the overall picture. A decline in industrial output could signal broader economic issues, such as reduced demand or supply chain disruptions. The French employment report is also important, as it will provide insight into the state of the French labor market.

The day will conclude with the publication of retail sales data for the Eurozone. This report will provide insights into consumer spending, a driving force of economic growth. An increase in retail sales typically indicates a healthy economy, while a decrease could point to economic difficulties.

As for the pound, today promises to be quite eventful. The main focus will be on the Monetary Policy Committee's decision from the Bank of England regarding the key interest rate. There is significant interest in the publication of the monetary policy report and the subsequent speech by the Bank's Governor, Andrew Bailey. The decision on the interest rate will have a substantial impact on the country's future economic trajectory. Keeping the rate unchanged could help curb inflation; however, it would make borrowing more expensive for both businesses and consumers, potentially slowing economic growth. On the other hand, hints of further rate cuts might stimulate economic activity but also risk accelerating inflation.

If the data aligns with economists' expectations, it is best to act based on the Mean Reversion strategy. If the data comes in significantly higher or lower than economists' forecasts, the Momentum strategy would be the best approach.

Momentum Strategy (Breakout Trades):

For the EUR/USD Pair

• Buy on the breakout of the level 1.1515, which may lead to an increase in the euro toward 1.1535 and 1.1575.
• Sell on the breakout of the level 1.1500, which may lead to a decline in the euro toward 1.1461 and 1.1431.

For the GBP/USD Pair

• Buy on the breakout of the level 1.3070, which may lead to an increase in the pound toward 1.3100 and 1.3131.
• Sell on the breakout of the level 1.3050, which may lead to a decline in the pound toward 1.3020 and 1.2985.

For the USD/JPY Pair

• Buy on the breakout of the level 154.05, which may lead to an increase in the dollar toward 154.30 and 154.70.
• Sell on the breakout of the level 153.70, which may lead to a decrease in the dollar toward 153.25 and 152.85.

Mean Reversion Strategy (Reversal Trades):

For the EUR/USD Pair

• Look for sells after a failed breakout above 1.1515 on a return below this level.
• Look for buys after a failed breakout below 1.1498 on a return to this level.

For the GBP/USD Pair

• Look for sells after a failed breakout above 1.3072 on a return below this level.
• Look for buys after a failed breakout below 1.3045 on a return to this level.

For the AUD/USD Pair

• Look for sells after a failed breakout above 0.6527 on a return below this level.
• Look for buys after a failed breakout below 0.6499 on a return to this level.

For the USD/CAD Pair

• Look for sells after a failed breakout above 1.4112 on a return below this level.
• Look for buys after a failed breakout below 1.4093 on a return to this level.