08.05.202612:28 Forex Analysis & Reviews: Level and Target Adjustments for the U.S. Session – May 8th

The euro and British pound were both traded today using a Momentum strategy. I did not take any trades using Mean Reversion.

Important data is expected next, which will determine the Federal Reserve's policy stance and its approach to interest rates. This includes U.S. Nonfarm Payrolls data for April and the unemployment rate. Strong data could signal sustained growth for a second consecutive month, increasing the likelihood that the Fed will maintain a tight monetary policy to combat inflation. Weak figures, on the contrary, may strengthen discussions about possible policy easing.

The University of Michigan Consumer Sentiment Index is also being released, reflecting household confidence in the economy. Its component measuring medium-term inflation expectations is particularly important for the Federal Reserve. The central bank closely monitors this indicator, as entrenched high inflation expectations may make it harder to return inflation to the 2% target. Rising expectations are often seen as a signal for maintaining or tightening policy.

In the case of strong data, 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 breakout above 1.1780 – potential rise to 1.1804 and 1.1825
• Sell breakout below 1.1760 – potential decline to 1.1726 and 1.1701

GBP/USD

• Buy breakout above 1.3630 – potential rise to 1.3655 and 1.3700
• Sell breakout below 1.3599 – potential decline to 1.3574 and 1.3547

USD/JPY

• Buy breakout above 156.73 – potential rise to 156.99 and 157.25
• Sell breakout below 156.45 – potential decline to 156.06 and 155.75

Mean Reversion Strategy (Reversal) for the second half of the day:

EUR/USD

• Sell after a false breakout above 1.1790 and a return below this level
• Buy after a false breakout below 1.1745 and a return above this level

GBP/USD

• Sell after a false breakout above 1.3646 and a return below this level
• Buy after a false breakout below 1.3580 and a return above this level

AUD/USD

• Sell after a false breakout above 0.7253 and a return below this level
• Buy after a false breakout below 0.7223 and a return above this level

USD/CAD

• Sell after a false breakout above 1.3658 and a return below this level
• Buy after a false breakout below 1.3635 and a return above this level