18.05.202619:32 Forex Analysis & Reviews: Level and Target Adjustments for the U.S. Session – May 18th

Today, the euro, pound, and Canadian dollar were traded using the Momentum strategy, but no significant moves developed. I did not trade anything using the Mean Reversion strategy.

Later, calm in the currency market may only be disrupted by speeches from representatives of the Federal Reserve and the Trump administration, as the news backdrop is shaped by the absence of major statistical data. Ahead, we only have the release of the NAHB Housing Market Index in the US. This indicator, which reflects builders' sentiment, will remain the only quantitative reference point for traders trying to assess the outlook for future US economic growth.

Attention will also remain focused on the G7 summit taking place these days. Geopolitical rhetoric and diplomatic debates among G7 leaders will create conditions for volatility capable of outweighing any dry statistical reports. If the NAHB index confirms stability in the sector, it may provide only short-term support for the dollar, while any ambiguous signal from the G7 camp or sharp rhetoric regarding foreign policy could instantly reverse the market in the opposite direction.

In the event of strong data, 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 1.1645 may lead to euro growth toward 1.1673 and 1.1698;
• Selling on a breakout below 1.1620 may lead to euro weakness toward 1.1592 and 1.1569.

For GBP/USD

• Buying on a breakout above 1.3372 may lead to pound growth toward 1.3406 and 1.3443;
• Selling on a breakout below 1.3332 may lead to pound weakness toward 1.3290 and 1.3249.

For USD/JPY

• Buying on a breakout above 159.13 may lead to dollar growth toward 159.39 and 159.60;
• Selling on a breakout below 158.85 may lead to dollar selling toward 158.57 and 158.28.

Mean Reversion Strategy (Reversal) for the Second Half of the Day

For EUR/USD

• I will look for selling opportunities after a failed breakout above 1.1648 followed by a return below this level;
• I will look for buying opportunities after a failed breakout below 1.1623 followed by a return above this level.

For GBP/USD

• I will look for selling opportunities after a failed breakout above 1.3377 followed by a return below this level;
• I will look for buying opportunities after a failed breakout below 1.3329 followed by a return above this level.

For AUD/USD

• I will look for selling opportunities after a failed breakout above 0.7175 followed by a return below this level;
• I will look for buying opportunities after a failed breakout below 0.7139 followed by a return above this level.

For USD/CAD

• I will look for selling opportunities after a failed breakout above 1.3750 followed by a return below this level;
• I will look for buying opportunities after a failed breakout below 1.3731 followed by a return above this level.