06.07.202612:59 Analisis Forex & Kajian: Level and Target Adjustments for the U.S. Session – July 6th

The British pound was traded today using a Mean Reversion strategy, while the Canadian dollar was traded using a Momentum strategy.

The euro showed almost no reaction to news that the eurozone had put the ECB in an uncomfortable position. As data showed, producer prices (PPI) accelerated in May to +5.9% y/y, the highest level since 2023, while retail sales rose by only 0.2% month-on-month. A classic divergence: pressure on producers is increasing, while consumer demand is weakening. The main driver of PPI was energy, +14% y/y. This is a spillover from the peak in oil prices during the war-related shock.

As for the pound, it came under pressure after new statistics showed only a formal improvement in the UK construction sector: the business activity index for June rose to 38.4 from May's 38.2, which was a six-year low. In essence, the sector remains in deep stagnation — the reading is far from the 50-point threshold, and the list of problems remains unchanged.

In the second half of the day, market attention shifts to the US data block: the ISM services business activity index and the composite PMI index will be released. Both indicators are so-called leading indicators: they are based on surveys of purchasing managers and show whether business activity is expanding or contracting. A reading above 50 signals expansion, while below 50 indicates contraction. Therefore, the market reacts not so much to the absolute figure as to the deviation from forecasts. The ISM services index is especially important for the dollar, as the services sector accounts for the largest share of the US economy and serves as an indirect indicator of inflation and consumer demand. An additional source of volatility will be a speech by FOMC member Christopher Waller — traders will analyze his comments on monetary policy for signals about the future rate path.

Momentum strategy will be applied in the case of strong data. If there is no market reaction to the data, the Mean Reversion strategy will continue to be used.

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

For the EURUSD pair

• Buy positions on a breakout above 1.1428 may lead to euro growth toward 1.1459 and 1.1486;
• Sell positions on a breakout below 1.1400 may lead to a decline in the euro toward 1.1365 and 1.1328;

For the GBPUSD pair

• Buy positions on a breakout above 1.3353 may lead to pound growth toward 1.3377 and 1.3416;
• Sell positions on a breakout below 1.3330 may lead to a decline in the pound toward 1.3298 and 1.3267;

For the USDJPY pair

• Buy positions on a breakout above 162.35 may lead to dollar growth toward 162.56 and 162.83;
• Sell positions on a breakout below 162.20 may lead to dollar decline toward 162.00 and 161.80;

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

For the EURUSD pair

• I will look for sell opportunities after a failed breakout above 1.1430, on a return below this level;
• I will look for buy opportunities after a failed breakout below 1.1401, on a return above this level;

For the GBPUSD pair

• I will look for sell opportunities after a failed breakout above 1.3350, on a return below this level;
• I will look for buy opportunities after a failed breakout below 1.3326, on a return above this level;

For the AUDUSD pair

• I will look for sell opportunities after a failed breakout above 0.6943, on a return below this level;
• I will look for buy opportunities after a failed breakout below 0.6924, on a return above this level;

For the USDCAD pair

• I will look for sell opportunities after a failed breakout above 1.4238, on a return below this level;
• I will look for buy opportunities after a failed breakout below 1.4208, on a return above this level;