22.06.202612:26 Forex Analysis & Reviews: Level and Target Adjustments for the U.S. Session – June 22

The euro and British pound were traded today using a Mean Reversion strategy. I did not trade anything using the Momentum strategy.

The absence of important eurozone statistics had an impact on euro volatility, while the British pound was affected more significantly. Traders, lacking fundamental data to support informed decisions, were forced to rely on speculative sentiment, which led to a sharp decline in volatility.

The British pound even fell below 1.3200 but later recovered part of its losses. The decline in the pound was a reaction to UK Prime Minister Keir Starmer's announcement of his resignation. The market appears to have already priced in the likelihood of a leadership change, which helped stabilize the national currency. The absence of strong volatility in GBP/USD suggests that investors perceive the current situation as predictable, despite upcoming political changes.

During the U.S. session, there is also no significant U.S. economic data, shifting market attention to the speech by FOMC member Christopher Waller. His remarks may provide insight into the Federal Reserve's next steps following the recent decision, as well as its assessment of the impact of the reopening of the Strait of Hormuz on the global economy. Given the current geopolitical tensions and uncertainty in energy markets, any statements from Waller are likely to be closely analyzed.

Particular attention will be paid to his stance on inflation and the outlook for further monetary policy tightening. Traders will be looking for signals as to whether the Fed will maintain its current rhetoric or adjust its position in response to new geopolitical developments. The reopening of the Strait of Hormuz, a key oil transport route, allows the FOMC to expect a more pronounced decline in inflation in the coming months.

In the case of strong data, I will rely on 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:

• Buy breakout above 1.1485, targeting 1.1527 and 1.1557
• Sell breakout below 1.1448, targeting 1.1414 and 1.1384

For GBP/USD:

• Buy breakout above 1.3240, targeting 1.3280 and 1.3323
• Sell breakout below 1.3225, targeting 1.3193 and 1.3162

For USD/JPY:

• Buy breakout above 161.83, targeting 162.04 and 162.24
• Sell breakout below 161.56, targeting 161.33 and 161.10

Mean Reversion Strategy (Reversion to Mean) for the second half of the day:

For EUR/USD:

• Sell after a failed breakout above 1.1471 and a return below this level
• Buy after a failed breakout below 1.1440 and a return above this level

For GBP/USD:

• Sell after a failed breakout above 1.3248 and a return below this level
• Buy after a failed breakout below 1.3194 and a return above this level

For AUD/USD:

• Sell after a failed breakout above 0.7015 and a return below this level
• Buy after a failed breakout below 0.6993 and a return above this level

For USDCAD:

• Sell after a failed breakout above 1.4196 and a return below this level
• Buy after a failed breakout below 1.4163 and a return above this level