15.05.202617:41 Analisis Forex & Kajian: Level and Target Adjustments for the U.S. Session – May 15th

Traders frightened by inflation are maintaining short positions in risk assets while continuing to shift into the U.S. dollar. In the second half of the day, we are expecting the release of the Empire Manufacturing Index and U.S. industrial production data. These indicators, which serve as sensitive measures of the U.S. economy, may significantly affect currency pair's rates and sentiment in the foreign exchange market.

The Empire Manufacturing Index, calculated by the Federal Reserve Bank of New York, reflects business activity in New York State's manufacturing sector. A rise in the index above the neutral 0 level indicates expansion, while a decline below that level signals contraction. At the same time, changes in industrial production represent a key macroeconomic indicator measuring the output of all industrial enterprises, including factories, mines, and utilities. An increase in this indicator is generally viewed as a sign of economic growth, while a decline may signal a slowdown.

If the released data comes in better than economists' forecasts, this could trigger a sharp increase in demand for the U.S. dollar, continuing its bullish trend at the end of the week against a range of other currencies.

If the statistics are strong, I will rely on implementing the Momentum strategy. If the market shows little 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 above 1.1648 may lead to euro growth toward 1.1673 and 1.1698;
• Selling on a breakout below 1.1620 may lead to euro decline 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 decline toward 1.3290 and 1.3249;

For USD/JPY

• Buying on a breakout above 158.60 may lead to dollar growth toward 158.87 and 159.25;
• Selling on a breakout below 157.28 may lead to dollar sell-offs toward 157.93 and 157.65;

Mean Reversion Strategy for the Second Half of the Day

For EUR/USD

• I will look for selling opportunities after a failed breakout above 1.1650 followed by a return below that level;
• I will look for buying opportunities after a failed breakout below 1.1615 followed by a return above that level;

For GBP/USD

• I will look for selling opportunities after a failed breakout above 1.3382 followed by a return below that level;
• I will look for buying opportunities after a failed breakout below 1.3319 followed by a return above that level;

For AUD/USD

• I will look for selling opportunities after a failed breakout above 0.7174 followed by a return below that level;
• I will look for buying opportunities after a failed breakout below 0.7135 followed by a return above that level;

For USD/CAD

• I will look for selling opportunities after a failed breakout above 1.3762 followed by a return below that level;
• I will look for buying opportunities after a failed breakout below 1.3733 followed by a return above that level.