18.03.202612:42 Forex Analyse & Reviews: Level and Target Adjustments for the U.S. Session – March 18th

The euro, British pound, and Canadian dollar were traded very effectively today using the Mean Reversion strategy. I did not execute any trades using Momentum.

Data on inflation growth in the eurozone for February fully matched economists' forecasts. The headline index rose by 1.9%, while core prices increased by 2.4%. These figures indicate stability in price trends, but do not rule out potential medium-term risks—especially after the record surge in energy prices in March of this year. Although inflation remains close to the European Central Bank's target level of 2%, March figures could change significantly. This increases uncertainty for businesses and consumers and prompts the ECB to reconsider the outlook for interest rates.

In the second half of the day, we expect data on the Producer Price Index (PPI) and core PPI (excluding food and energy). These figures are important for assessing inflation trends, as they reflect companies' costs and can act as leading indicators for consumer inflation. However, despite their informational value, market attention will be focused on a more significant event: the Federal Open Market Committee's decision on the key interest rate. The Federal Reserve's policy—whether it changes or maintains the rate—has the most substantial impact on financial markets. The FOMC rate decision, along with comments from the Fed Chair regarding future monetary policy amid the U.S. conflict with Iran, will shape trader and investor expectations in the near term. A hawkish stance by the Fed will strengthen the dollar, while a dovish stance in favor of economic growth will lead to a more pronounced weakening of the dollar.

If the data is strong, 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:

EUR/USD

• Buy on a breakout above 1.1565, targeting 1.1609 and 1.1645
• Sell on a breakout below 1.1522, targeting 1.1487 and 1.1448

GBP/USD

• Buy on a breakout above 1.3371, targeting 1.3406 and 1.3440
• Sell on a breakout below 1.3335, targeting 1.3305 and 1.3275

USD/JPY

• Buy on a breakout above 159.18, targeting 159.55 and 159.74
• Sell on a breakout below 158.85, targeting 158.57 and 158.28

Mean Reversion Strategy (Reversal) for the Second Half of the Day:

EUR/USD

• Look for selling opportunities after a failed breakout above 1.1561 and a return below this level
• Look for buying opportunities after a failed breakout below 1.1514 and a return to this level

GBP/USD

• Look for selling opportunities after a failed breakout above 1.3386 and a return below this level
• Look for buying opportunities after a failed breakout below 1.3332 and a return to this level

AUD/USD

• Look for selling opportunities after a failed breakout above 0.7132 and a return below this level
• Look for buying opportunities after a failed breakout below 0.7100 and a return to this level

USD/CAD

• Look for selling opportunities after a failed breakout above 1.3719 and a return below this level
• Look for buying opportunities after a failed breakout below 1.3676 and a return to this level