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01.05.202607:24 Forex Analysis & Reviews: Intraday Strategies for Beginner Traders on May 1

The US dollar sharply declined yesterday and posted its worst month in a long time, primarily due to the prospects of peace negotiations to end the war with Iran, prompting traders to reevaluate their positions on this safe-haven currency. The euro and pound saw significant gains following central bank meetings.

After European Central Bank President Christine Lagarde suggested yesterday that members would consider raising interest rates at the June meeting, the euro surged against the US dollar. A similar trend was observed with the British pound.

These statements triggered a rapid rise in both the euro and the pound, which exhibited significant strengthening in the currency markets. Investors interpreted Lagarde's and Bailey's words as a signal for an imminent tightening of monetary policy, which historically leads to increased demand for the currency of the region implementing the tightening.

Today, the absence of new macroeconomic data from the Eurozone effectively deprives the market of reasons for significant corrections or reassessment of current positions. In such conditions, where there are no fresh shocks or meaningful news, previously established trends tend to persist. This means that the positive dynamics set by yesterday's statement from ECB President Christine Lagarde may continue to influence the EUR/USD pair.

Regarding the pound, the day will be marked by the release of several important macroeconomic indicators that could significantly impact the pair's dynamics. In the first half of the day, investors will focus on data from the manufacturing sector's Purchasing Managers Index (PMI). This indicator, which reflects the state of a key sector of the economy, is traditionally considered a leading indicator, and its value may provide insight into current trends in manufacturing and, accordingly, economic growth prospects.

In addition to the PMI, data on the change in the M4 money supply volume will also be published today. This figure is an important indicator of liquidity in the economy and can signal potential inflationary pressures or, conversely, a slowdown in economic activity.

The series of important reports will conclude today with the Nationwide House Price Index. Changes in this index are directly related to consumer sentiment and purchasing power, and they also reflect the state of the real estate market, which plays a significant role in the UK economy.

Good figures could strengthen the pound's bullish market.

If the data aligns with economists' expectations, it would be better to act based on the Mean Reversion strategy. If the data turns out to be much higher or lower than economists' expectations, it is best to use the Momentum strategy.

Momentum Strategy (Breakout):

For the EUR/USD Pair

Buy on breakout at 1.1737, which may lead to a rise in the euro to the levels of 1.1753 and 1.1773;

Sell on a breakout at 1.1712, which may lead to a decline in the euro to the levels of 1.1685 and 1.1657;

For the GBP/USD Pair

Buy on breakout at 1.3613, which may lead to a rise in the pound to the levels of 1.3632 and 1.3668;

Sell on a breakout at 1.3590, which may lead to a decline in the pound to the levels of 1.3570 and 1.3550;

For the USD/JPY Pair

Buy on breakout at 157.40, which may lead to a rise in the dollar to the levels of 157.69 and 157.93;

Sell on a breakout at 157.05, which may lead to dollar sell-offs to the levels of 156.73 and 156.33;

Mean Reversion Strategy (Return):

For the EUR/USD Pair

I will look to sell after a failed breakout above 1.1739 on a return below this level;

I will look to buy after a failed breakout above 1.1719 on a return to this level;

For the GBP/USD Pair

I will look to sell after a failed breakout above 1.3613 on a return below this level;

I will look to buy after a failed breakout above 1.3585 on a return to this level;

For the AUD/USD Pair

I will look to sell after a failed breakout above 0.7205 on a return below this level;

I will look to buy after a failed breakout above 0.7185 on a return to this level;

For the USD/CAD Pair

I will look to sell after a failed breakout above 1.3599 on a return below this level;

I will look to buy after a failed breakout above 1.3573 on a return to this level;

*تعینات کیا مراد ہے مارکیٹ کے تجزیات یہاں ارسال کیے جاتے ہیں جس کا مقصد آپ کی بیداری بڑھانا ہے، لیکن تجارت کرنے کے لئے ہدایات دینا نہیں.

Miroslaw Bawulski,
Analytical expert of InstaSpot
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