04.05.202613:12 Analisis Forex & Kajian: Level and Target Adjustments for the U.S. Session – May 4th

Today, only the euro was traded using the Mean Reversion strategy. I traded the pound using the Momentum strategy.

The euro, pound, and other risk assets declined following news that Iran had attacked a U.S. military ship attempting to enter the Strait of Hormuz area. However, the Americans have so far denied that such an attack took place. It hardly needs to be reminded that the situation in the Strait of Hormuz region is currently one of the key factors determining the future direction of the U.S. dollar and risk assets. The observed volatility indicates increased sensitivity of financial markets to geopolitical risks. Nevertheless, the lack of official confirmation from U.S. sources calls for caution.

In the second half of the day, attention will also be focused on U.S. factory orders data. These figures are traditionally considered a leading indicator of business activity and may provide insight into the condition of the U.S. industrial sector. Positive trends are expected to continue; however, any deviation from forecasts could trigger some market volatility.

Additionally, remarks from FOMC member John Williams will be of significant interest. His comments on the current economic situation, inflation expectations, and the outlook for monetary policy could have a substantial impact on market expectations regarding future interest rates.

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:

• Buying on a breakout of 1.1723 may lead to euro growth toward 1.1749 and 1.1767;
• Selling on a breakout of 1.1698 may lead to a decline toward 1.1675 and 1.1657;

For GBP/USD:

• Buying on a breakout of 1.3569 may lead to pound growth toward 1.3600 and 1.3627;
• Selling on a breakout of 1.3537 may lead to a decline toward 1.3504 and 1.3481;

For USD/JPY:

• Buying on a breakout of 157.40 may lead to dollar growth toward 157.70 and 157.99;
• Selling on a breakout of 156.90 may lead to dollar selling toward 156.66 and 156.30;

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

For EUR/USD:

• I will look for selling opportunities after a false breakout above 1.1735 followed by a return below this level;
• I will look for buying opportunities after a false breakout below 1.1691 followed by a return to this level;

For GBP/USD:

• I will look for selling opportunities after a false breakout above 1.3585 followed by a return below this level;
• I will look for buying opportunities after a false breakout below 1.3517 followed by a return to this level;

For AUD/USD:

• I will look for selling opportunities after a false breakout above 0.7202 followed by a return below this level;
• I will look for buying opportunities after a false breakout below 0.7171 followed by a return to this level;

For USD/CAD:

• I will look for selling opportunities after a false breakout above 1.3619 followed by a return below this level;
• I will look for buying opportunities after a false breakout below 1.3590 followed by a return to this level;