The euro, pound, and other risk assets strengthened their positions against the US dollar following inflation-related US data. Significant pressure on the dollar also came from White House statements indicating that talks with China regarding a trade agreement had reached a stalemate.

The market reacted cautiously, as such expectations were already priced in. Traders will continue to monitor macroeconomic indicators closely, trying to predict the next moves of the US central bank. Uncertainty regarding the timing of rate cuts puts pressure on the dollar and other assets that are more sensitive to interest rate changes.

At the same time, stable inflation could indicate that the US economy is demonstrating resilience, potentially supporting consumer demand and corporate profits. However, keeping high rates for too long could negatively impact investment and lead to a slowdown in economic growth over the long term.

Today, the euro could continue its rise, but good data on the Eurozone manufacturing PMI would be needed for that. Otherwise, renewed pressure on the single European currency could return. Given the ongoing problems in the manufacturing sector, the European Central Bank will likely cut interest rates again this week, which would act as a restraining factor for EUR/USD growth. However, geopolitical risks should not be forgotten, as they could influence currency dynamics. In the near term, the euro's movement will be determined by macroeconomic indicators and overall market sentiment. Increased risk appetite could support the European currency, while increased investor caution could put pressure on it.

Similar manufacturing data are expected for the UK today, so a similar market reaction to the data can be expected.

If the data aligns with economists' expectations, employing a Mean Reversion strategy is advisable. Conversely, a Momentum strategy should be utilized if the data significantly surpasses or falls short of expectations.

Momentum Strategy (Breakout):

EUR/USD

Buying on a breakout of 1.1386 could lead to a rise toward 1.1416 and 1.1453;

Selling on a breakout of 1.1347 could lead to a fall toward 1.1314 and 1.1270.

GBP/USD

Buying on a breakout of 1.3505 could lead to a rise toward 1.3555 and 1.3602;

Selling on a breakout of 1.3450 could lead to a fall toward 1.3416 and 1.3382.

USD/JPY

Buying on a breakout of 143.50 could lead to a rise toward 143.75 and 144.20;

Selling on a breakout of 143.25 could lead to a sell-off toward 142.79 and 142.32.

Mean Reversion Strategy (Pullbacks):

EUR/USD

I will look for selling opportunities after a failed breakout above 1.1386 on a return below this level;

I will look for buying opportunities after a failed breakout below 1.1350 on a return to this level.

GBP/USD

I will look for selling opportunities after a failed breakout above 1.3508 on a return below this level;

I will look for buying opportunities after a failed breakout below 1.3468 on a return to this level.

AUD/USD

I will look for selling opportunities after a failed breakout above 0.6478 on a return below this level;

I will look for buying opportunities after a failed breakout below 0.6442 on a return to this level.

USD/CAD

I will look for selling opportunities after a failed breakout above 1.3733 on a return below this level;

I will look for buying opportunities after a failed breakout below 1.3698 on a return to this level.