01.04.202613:05 Forex Analysis & Reviews: Level and Target Adjustments for the U.S. Session – April 1st

In the first half of the day, only the euro and the Australian dollar could be traded using the Mean Reversion strategy, but the pairs never reached a proper reversal. Using the Momentum strategy, I traded the Japanese yen and the British pound, where fairly high volatility was observed.

Decent data on the Eurozone manufacturing PMI, which came in above economists' forecasts, maintained demand for the euro in the first half of the day. According to final data, the Eurozone PMI for March stood at 51.6 points, exceeding the preliminary estimate of 51.4 and analysts' expectations. This indicator, which is a leading measure of the manufacturing sector's condition, shows modest but still positive growth in activity, which traditionally supports the European currency.

In the second half of the day, market attention will shift to other important macroeconomic events. Traders will be particularly focused on U.S. labor market data. The spotlight will be on the ADP report on changes in nonfarm employment. This indicator, as a leading measure of total employment, often serves as a precursor to the official labor market data, setting the stage for larger market moves.

At the same time, investors will closely examine retail sales data. Strong retail figures may indicate healthy consumer demand and, consequently, stronger economic growth, which is a positive factor for the dollar.

The release of the U.S. ISM manufacturing index will also be significant. This index, covering a broad range of industrial enterprises, provides a comprehensive assessment of the manufacturing sector. Readings above 50 indicate expansion in activity, which would also support the dollar.

Speeches by Federal Reserve Open Market Committee members Alberto Musalem and Michael S. Barr will undoubtedly attract increased investor attention. However, even a hawkish tone from policymakers is unlikely to overshadow Trump's plans to end the war in Iran, so it is better to focus on new statements from the U.S. leader rather than on the positions of the aforementioned officials.

In the case of strong data, I will rely on implementing the Momentum strategy. If there is no market reaction 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 of 1.1615 may lead to growth toward 1.1635 and 1.1675;
• Selling on a breakout of 1.1580 may lead to a decline toward 1.1550 and 1.1515;

For GBP/USD:

• Buying on a breakout of 1.3325 may lead to growth toward 1.3366 and 1.3394;
• Selling on a breakout of 1.3290 may lead to a decline toward 1.3262 and 1.3220;

For USD/JPY:

• Buying on a breakout of 158.87 may lead to growth toward 159.10 and 159.30;
• Selling on a breakout of 158.50 may lead to a decline toward 158.30 and 157.90;

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 1.1622 with a return below this level;
• I will look for buying opportunities after a failed breakout below 1.1569 with a return to this level;

For GBP/USD:

• I will look for selling opportunities after a failed breakout above 1.3324 with a return below this level;
• I will look for buying opportunities after a failed breakout below 1.3265 with a return to this level;

For AUD/USD:

• I will look for selling opportunities after a failed breakout above 0.6977 with a return below this level;
• I will look for buying opportunities after a failed breakout below 0.6925 with a return to this level;

For USD/CAD:

• I will look for selling opportunities after a failed breakout above 1.3906 with a return below this level;
• I will look for buying opportunities after a failed breakout below 1.3877 with a return to this level.