21.01.202609:14 Forex Analysis & Reviews: Intraday strategies for beginner traders on January 21

The dollar continued its active decline against risk assets. It suffered the most versus the euro, which traders actively bought for several reasons.

The risk that European countries holding trillions of dollars in US bonds and equities could start selling them triggered yesterday's strong rally in the euro. Market participants, worried about the prospect of a transatlantic trade war, do not currently view the dollar as a safe-haven asset. Although such a scenario is unlikely, even given Trump's aggressive rhetoric and protectionist measures, one must be prepared for anything. European leaders could decide to take retaliatory measures against Trump's tariffs using financial levers. Selling US assets held by European central banks and sovereign funds could significantly weaken the dollar and destabilise the US financial system.

There is no eurozone data scheduled for the first half of today; only speeches by European Central Bank President Christine Lagarde and Bundesbank President Joachim Nagel are expected. Most likely, the policymakers will comment on Greenland and on measures they might take if Trump unleashes another trade war.

As for the pound, in the first half of the day, UK CPI, core CPI, and input/output price indices are due. These releases will certainly affect sterling, but their effect will probably be short-lived and limited, given the market's predominant focus on the Greenland issue. If inflation readings beat expectations, the pound may get a short-term boost, as this would strengthen arguments for a tighter Bank of England policy. However, against the backdrop of overall uncertainty and heightened geopolitical risk related to Greenland, investors are unlikely to make long-term decisions based solely on UK data.

If the data match economists' expectations, prefer a Mean Reversion strategy. If the data are much higher or lower than economists' expectations, it is best to use a Momentum strategy.

Momentum strategy (on breakout):

For EURUSD

• Buying on a breakout of 1.1736 may lead to euro gains toward 1.1756 and 1.1786;
• Selling on a breakout of 1.1700 may lead to euro declines toward 1.1680 and 1.1660;

For GBPUSD

• Buying on a breakout of 1.3453 may lead to pound gains toward 1.3475 and 1.3499;
• Selling on a breakout of 1.3426 may lead to pound declines toward 1.3404 and 1.3380;

For USDJPY

• Buying on a breakout of 158.28 may drive the dollar toward 158.53 and 158.81;
• Selling on a breakout of 157.93 may trigger dollar sell-offs toward 157.69 and 157.40;

Mean Reversion strategy (on return):

For EURUSD

• I will look for short positions after a failed breakout above 1.1741 on the return below that level;
• I will look for long positions after a failed breakout above 1.1705 on the return to that level;

For GBPUSD

• I will look for shorts after a failed breakout above 1.3460 on the return below that level;
• I will look for longs after a failed breakout above 1.3420 on the return to that level;

For AUDUSD

• I will look for shorts after a failed breakout above 0.6749 on the return below that level;
• I will look for longs after a failed breakout above 0.6725 on the return to that level;

For USDCAD

• I will look for shorts after a failed breakout above 1.3845 on the return below that level;
• I will look for longs after a failed breakout above 1.3819 on the return to that level.