20.01.202612:48 Forex Analysis & Reviews: Adjustment of levels and targets for the U.S. session on January 20th

Today, only the Australian dollar could be traded using the Mean Reversion strategy. Using the Momentum strategy, I traded the euro and the British pound.

Strong data from the ZEW Institute on business sentiment indices in Germany and the eurozone provided solid support for the euro. The ZEW Economic Sentiment Index, which reflects experts' optimism about the prospects of the German economy, exceeded expectations, strengthening investor confidence in the stability of the eurozone. This, in turn, led to increased demand for the European currency. At the same time, other factors are also playing an important role in supporting the euro. Trump's policy regarding Greenland and the strong pushback from the EU have further boosted demand for risk assets, pushing investors away from the U.S. dollar.

In the second half of the day, ADP weekly employment change figures are expected. Against the backdrop of dominant rumors about European sales of U.S. Treasury bonds and euro support driven by ZEW data, local economic indicators such as ADP risk being overshadowed. The market is already positioned for a certain scenario, and a significant deviation from forecasts would be required to change this sentiment. Moreover, it should be taken into account that weekly ADP data are only a preliminary estimate and often diverge from the official data released by the U.S. Department of Labor. Under the current circumstances, even positive employment data may be perceived as a temporary phenomenon, unable to alter the overall trend. Most likely, the market will focus on assessing geopolitical uncertainty and a potential revision of transatlantic relations. Therefore, it will be difficult for the dollar to show noticeable growth in the short term, even with support from positive statistical data.

In the case of strong statistics, I will rely on implementing the Momentum strategy. If there is no market reaction to the data, I will continue to use the Mean Reversion strategy.

Momentum strategy (breakout) for the second half of the day:

For EURUSD

• Buying on a breakout above 1.1742 may lead to euro growth toward 1.1764 and 1.1785;
• Selling on a breakout below 1.1717 may lead to a decline toward 1.1697 and 1.1676.

For GBPUSD

• Buying on a breakout above 1.3489 may lead to pound growth toward 1.3514 and 1.3539;
• Selling on a breakout below 1.3460 may lead to a decline toward 1.3425 and 1.3404.

For USDJPY

• Buying on a breakout above 158.02 may lead to dollar growth toward 158.28 and 158.63;
• Selling on a breakout below 157.80 may lead to dollar selling toward 157.55 and 157.20.

Mean Reversion strategy (pullback) for the second half of the day:

For EURUSD

• I will look for sell opportunities after a failed breakout above 1.1760, followed by a return below this level;
• I will look for buy opportunities after a failed breakout below 1.1689, followed by a return to this level.

For GBPUSD

• I will look for sell opportunities after a failed breakout above 1.3515, followed by a return below this level;
• I will look for buy opportunities after a failed breakout below 1.3428, followed by a return to this level.

For AUDUSD

• I will look for sell opportunities after a failed breakout above 0.6754, followed by a return below this level;
• I will look for buy opportunities after a failed breakout below 0.6713, followed by a return to this level.

For USDCAD

• I will look for sell opportunities after a failed breakout above 1.3845, followed by a return below this level;
• I will look for buy opportunities after a failed breakout below 1.3810, followed by a return to this level.