The pound was traded today using the Mean Reversion strategy. I traded the Australian dollar using the Momentum strategy.

Eurozone inflation jumped to 3.3% year-on-year in August from 2.9% in July, but the euro barely reacted to the report because the data were in line with economists' forecasts. The Consumer Price Index reflects the pace of price growth and directly affects expectations for the ECB's interest rate, but since the acceleration had already been priced in by the market, there was no reason for sharp movements. The entire story, however, fit into a single line, as energy prices rose by 14.3% compared with 10.3% a month earlier and by 2.9% in just one month, accounting for almost all of the acceleration.

British industry also continued to grow in August, but at a noticeably slower pace, with the Manufacturing PMI falling to 51.7 from 51.9, a five-month low, although it was still above the preliminary estimate of 51.5. The pound also chose to ignore this development.

In the second half of the day, the market is awaiting the ISM Manufacturing PMI, the Job Openings and Labor Turnover Survey (JOLTS) from the US Bureau of Labor Statistics, as well as a speech by FOMC member Michael Barr. The ISM index is based on surveys of purchasing managers and reflects the state of the manufacturing sector, with the 50-point mark separating expansion from contraction, while the JOLTS report on job openings shows the degree of tightness in the labor market and serves as one of the Fed's reference points when assessing employment. Barr's comments will add weight to the agenda, as the market uses them to gauge the central bank's stance.

Strong data would provide even more support for the dollar, as robust statistics would reinforce the already hawkish expectations for Fed policy following Jackson Hole. For the euro and the pound, this creates a risk of further declines, as a stronger dollar would put additional pressure on EUR/USD and GBP/USD.

If the data are strong, I will rely on the Momentum strategy. If the market does not react 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 1.1600 could lead to a rise in the euro toward 1.1620 and 1.1639.
• Selling on a breakout below 1.1580 could lead to a decline in the euro toward 1.1557 and 1.1534.

For GBP/USD

• Buying on a breakout above 1.3555 could lead to a rise in the pound toward 1.3574 and 1.3596.
• Selling on a breakout below 1.3527 could lead to a decline in the pound toward 1.3502 and 1.3475.

For USD/JPY

• Buying on a breakout above 160.24 could lead to a rise in the dollar toward 160.43 and 160.67.
• Selling on a breakout below 160.02 could lead to a decline in the dollar toward 159.80 and 159.60.

Mean Reversion Strategy (return) for the second half of the day:

For EUR/USD

• I will look for selling opportunities after a failed break above 1.1613, followed by a return below this level.
• I will look for buying opportunities after a failed break below 1.1579, followed by a return to this level.

For GBP/USD

• I will look for selling opportunities after a failed break above 1.3552, followed by a return below this level.
• I will look for buying opportunities after a failed break below 1.3525, followed by a return to this level.

For AUD/USD

• I will look for selling opportunities after a failed break above 0.7156, followed by a return below this level.
• I will look for buying opportunities after a failed break below 0.7135, followed by a return to this level.

For USD/CAD

• I will look for selling opportunities after a failed break above 1.3879, followed by a return below this level.
• I will look for buying opportunities after a failed break below 1.3850, followed by a return to this level.