05.08.202613:17 Analisis Forex & Kajian: Level and Target Adjustments for the U.S. Session – August 5

The euro, the pound, and the Canadian dollar performed well today under the Mean Reversion strategy. I did not take any trades using the Momentum strategy.

The latest economic data was well received by traders. Eurozone business activity expanded at the fastest pace in eight months in July, with the Composite PMI rising from 50.0 to 52.0. The services sector returned to growth for the first time in three months, climbing to 51.7 from 49.4 in June. Additional positive signals came from Germany, where business activity expanded for the first time since March, while Spain posted its strongest growth in nearly a year and a half. Business optimism also reached its highest level since January. The euro reacted with modest gains, as the improving economic outlook supported the single currency. However, the advance remained limited.

The UK services sector also returned to growth in July for the first time in three months, with the Services PMI rising to 52.1 from 48.8 in June. The Composite PMI for the private sector also moved back into expansion territory, increasing to 52.2 from 49.3, marking the first expansion since April. PMI indicators are based on business surveys and measure the pace of economic activity, with the 50-point threshold separating expansion from contraction. Therefore, the services sector's return above this level confirmed improving economic conditions. The pound responded with modest gains, as stronger business activity supported the currency and reinforced confidence in the resilience of the UK economy.

During the second half of the day, market participants will focus on a busy U.S. economic calendar, including the ISM Services PMI, the S&P Global Composite PMI, the ADP Employment Change report, and remarks by FOMC member Lisa Cook. PMI indicators reflect business activity based on corporate surveys, with readings above 50 signaling expansion, while the ADP report is widely viewed as an early indicator of labor market conditions and often shapes expectations ahead of the official employment report. Cook's remarks could also influence market sentiment, as investors closely monitor Federal Reserve officials for clues about the future path of interest rates.

The data are expected to come in relatively strong, which supports the case for further U.S. dollar strength. This creates downside risks for both the euro and the pound, as stronger-than-expected figures could put pressure on EUR/USD and GBP/USD. Conversely, weaker data would likely weigh on the dollar and provide additional support for risk-sensitive assets.

If the U.S. data come in strong, I will rely on the Momentum strategy. If the market shows little or no reaction to the releases, I will continue using the Mean Reversion strategy.

Momentum Strategy (Breakout Trading) for the Second Half of the Day

EUR/USD

• A breakout above 1.1557 could push the euro toward 1.1592 and 1.1620.
• A breakout below 1.1528 could send the euro lower toward 1.1504 and 1.1482.

GBP/USD

• A breakout above 1.3474 could drive the pound toward 1.3503 and 1.3539.
• A breakout below 1.3444 could send the pound lower toward 1.3419 and 1.3393.

USD/JPY

• A breakout above 157.93 could lift the U.S. dollar toward 158.28 and 158.57.
• A breakout below 157.69 could trigger a decline toward 157.40 and 157.05.

Mean Reversion Strategy (Fade the Move) for the Second Half of the Day

EUR/USD

• I will look for short positions if the price fails to hold above 1.1548 and returns below this level.
• I will look for long positions if the price fails to hold below 1.1528 and returns above this level.

GBP/USD

• I will look for short positions if the price fails to hold above 1.3473 and returns below this level.
• I will look for long positions if the price fails to hold below 1.3447 and returns above this level.

AUD/USD

• I will look for short positions if the price fails to hold above 0.7060 and returns below this level.
• I will look for long positions if the price fails to hold below 0.7038 and returns above this level.

USD/CAD

• I will look for short positions if the price fails to hold above 1.4076 and returns below this level.
• I will look for long positions if the price fails to hold below 1.4056 and returns above this level.