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01.07.202619:15 Forex Analysis & Reviews: Level and Target Adjustments for the U.S. Session – July 1st

Ważne do 06:00 UTC--4

Today, both the euro and the pound were traded using the Mean Reversion strategy, although neither produced a significant reversal. I did not execute any trades using the Momentum strategy.

The euro came under pressure after news showed that annual inflation in June slowed sharply to 2.8%, whereas the market had expected a decline only to 3.0%. The rapid deceleration in eurozone inflation came as a surprise to many market participants. An indicator that had recently been a major concern for policymakers showed a significant decline, opening up new possibilities for monetary policy. ECB officials undoubtedly welcomed these figures. Inflation slowing to 2.8% substantially eases the European Central Bank's task. The central bank now has solid grounds to pause its interest rate hiking cycle, which was aimed at containing price growth. Such a pause would allow policymakers to assess the impact of previous tightening measures and give the economy time to adjust to the new environment.

The British pound remained remarkably resilient despite mixed economic data from the United Kingdom. The manufacturing sector failed to generate strong optimism among investors. The final Manufacturing PMI for June came in at 52.5, below the preliminary estimate of 53.1. Although the index remains above the 50 threshold that signals expansion, the slowdown raises questions about the sustainability of the recovery. A similar picture can be seen in the housing market, which unexpectedly showed signs of accelerating.

Traders will now turn their attention to a fresh batch of U.S. economic data, which could significantly influence expectations for the Federal Reserve's future monetary policy. The labor market will remain the primary focus, as it continues to be one of the most important indicators of the health of the U.S. economy.

Particular attention will be paid to the June ADP Employment Change report. Published by Automatic Data Processing, this indicator is often viewed as a leading signal for the official Nonfarm Payrolls (NFP) report, which will be released later. Strong ADP data could reinforce expectations of a solid labor market report, potentially encouraging the Federal Reserve to maintain a more hawkish stance.

The ISM Manufacturing PMI will also be closely watched. This index measures business activity in the U.S. manufacturing sector and is one of the leading economic indicators. A higher reading would signal improving manufacturing activity, which could be interpreted as a positive sign for the U.S. economy and, consequently, for the U.S. dollar.

The day will conclude with a speech by FOMC Chairman Kevin Warsh. Markets will carefully analyze every comment for clues regarding the Federal Reserve's next policy steps. If his remarks indicate the possibility of further monetary policy tightening, the U.S. dollar is likely to continue strengthening against risk-sensitive assets.

If the U.S. data come in stronger than expected, I will rely primarily on the Momentum strategy. If the market shows little reaction to the releases, I will continue using the Mean Reversion strategy.

Momentum Strategy (Breakout) for the U.S. Session

EUR/USD

  • Buy on a breakout above 1.1408, targeting 1.1436 and 1.1459.
  • Sell on a breakout below 1.1382, targeting 1.1356 and 1.1327.

GBP/USD

  • Buy on a breakout above 1.3250, targeting 1.3270 and 1.3290.
  • Sell on a breakout below 1.3220, targeting 1.3191 and 1.3170.

USD/JPY

  • Buy on a breakout above 162.80, targeting 162.99 and 163.22.
  • Sell on a breakout below 162.64, targeting 162.34 and 162.08.

Mean Reversion Strategy for the U.S. Session

Exchange Rates 01.07.2026 analysis

EUR/USD

  • Look for selling opportunities if the price fails to hold above 1.1413 and returns below this level.
  • Look for buying opportunities if the price fails to break below 1.1377 and rebounds back above this level.

Exchange Rates 01.07.2026 analysis

GBP/USD

  • Look for selling opportunities if the price fails to hold above 1.3263 and returns below this level.
  • Look for buying opportunities if the price fails to break below 1.3225 and rebounds back above this level.

Exchange Rates 01.07.2026 analysis

AUD/USD

  • Look for selling opportunities if the price fails to hold above 0.6903 and returns below this level.
  • Look for buying opportunities if the price fails to break below 0.6884 and rebounds back above this level.

Exchange Rates 01.07.2026 analysis

USD/CAD

  • Look for selling opportunities if the price fails to hold above 1.4230 and returns below this level.
  • Look for buying opportunities if the price fails to break below 1.4205 and rebounds back above this level.

*Prezentowana analiza rynku ma charakter informacyjny i nie jest przewodnikiem po transakcji.

Miroslaw Bawulski,
Analytical expert of InstaSpot
© 2007-2026
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