13.08.202612:58 Analisis Forex & Kajian: Level and Target Adjustments for the U.S. Session – August 13

The British pound performed reasonably well today using the Mean Reversion strategy. I did not trade using Momentum.

The euro reacted with a slight decline to data showing that eurozone industrial production effectively stagnated in June. The indicator showed no monthly change, compared with the expected 0.1% increase. Industrial production reflects output at manufacturing facilities and serves as an indicator of the state of the real sector, so its stagnation disappointed the market and removed support for the single currency, pushing it lower. It is particularly noteworthy that the hard data failed to confirm the optimism seen in July survey data. For the ECB, this is a mixed backdrop that provides neither hawks nor doves with strong arguments ahead of the September meeting, and therefore offers no clear signal for the euro.

In the second half of the day, the market is awaiting an interesting batch of U.S. economic data, including the Producer Price Index and its core version excluding food and energy, as well as weekly initial jobless claims. The Producer Price Index reflects changes in producer-level selling prices and is considered an early indicator of inflation, as rising business costs are eventually passed on to consumer prices. Jobless claims will complement the picture with a timely snapshot of the labor market, while speeches by FOMC members Beth Hammack and Thomas Barkin will add further significance to the agenda.

For the dollar, the main focus will be on the inflation component. If producer prices rise, demand for the U.S. currency could quickly return, as stronger inflation increases the likelihood of a tighter Fed policy. This poses a risk of a retreat for the euro and pound, as a stronger dollar could weigh on EUR/USD and GBP/USD, while weak data would give both European currencies some relief. Another factor will be Hammack's comments, as her recent hawkish rhetoric has already supported the dollar.

In the event of strong economic data, I will rely on the Momentum strategy. If the data fail to trigger a market reaction, 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 1.1540 could lead to a rise in the euro toward 1.1560 and 1.1579.
• Selling on a breakout below 1.1525 could lead to a decline in the euro toward 1.1516 and 1.1502.

For GBP/USD

• Buying on a breakout above 1.3507 could lead to a rise in the pound toward 1.3541 and 1.3581.
• Selling on a breakout below 1.3475 could lead to a decline in the pound toward 1.3435 and 1.3401.

For USD/JPY

• Buying on a breakout above 159.39 could lead to a rise in the dollar toward 159.60 and 159.83.
• Selling on a breakout below 159.13 could lead to a decline in the dollar toward 158.83 and 158.57.

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

For EUR/USD

• I will look for selling opportunities after a failed break above 1.1551, followed by a return below this level.
• I will look for buying opportunities after a failed break below 1.1515, followed by a return to this level.

For GBP/USD

• I will look for selling opportunities after a failed break above 1.3505, followed by a return below this level.
• I will look for buying opportunities after a failed break below 1.3466, followed by a return to this level.

For AUD/USD

• I will look for selling opportunities after a failed break above 0.7070, followed by a return below this level.
• I will look for buying opportunities after a failed break below 0.7038, followed by a return to this level.

For USD/CAD

• I will look for selling opportunities after a failed break above 1.3956, followed by a return below this level.
• I will look for buying opportunities after a failed break below 1.3930, followed by a return to this level.