17.06.202613:16 Forex Analysis & Reviews: Level and Target Adjustments for the U.S. Session – June 17th

The euro showed almost no reaction to today's eurozone inflation data for May, while the pound declined notably, which invalidated its upward momentum. According to the data, annual consumer price growth in the eurozone accelerated to 3.2% from 3.0% in April. This modest increase, although slightly above analyst expectations, was insufficient to trigger significant volatility in the currency market. The key factor now will be the future actions of the ECB and the Fed. If inflation continues to show signs of acceleration, the market may begin to price in a potential further increase in interest rates. This could, in turn, provide support for the euro. However, based on today's reaction, the market remains in a wait-and-see mode.

Next, we will see retail sales figures, but a far more important event will be the FOMC interest rate decision. The rate is expected to remain unchanged, which is unlikely to trigger a strong market reaction. However, the first press conference of the new FOMC Chair Kevin Warsh will be a completely different matter. His statements and hints regarding future monetary policy will be decisive for the markets.

Traders will closely analyze any signals that may indicate a shift in the Fed's policy trajectory. In particular, attention will be focused on Warsh's comments regarding the labor market, inflation expectations, and the outlook for economic growth. If his tone is firmly hawkish and inflation pressures persist, we may see a sharp strengthening of the US dollar.

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 1.1620, targeting 1.1645 and 1.1664;
• Sell breakout below 1.1590, targeting 1.1566 and 1.1535;

GBP/USD:

• Buy breakout above 1.3420, targeting 1.3460 and 1.3490;
• Sell breakout below 1.3390, targeting 1.3360 and 1.3330;

USD/JPY:

• Buy breakout above 160.40, targeting 160.65 and 160.99;
• Sell breakout below 160.25, targeting 160.02 and 159.80;

Mean Reversion Strategy (reversion to the mean) for the second half of the day:

EUR/USD:

• Sell after a failed breakout above 1.1617, on a move back below this level;
• Buy after a failed breakout below 1.1593, on a move back above this level;

GBP/USD:

• Sell after a failed breakout above 1.3433, on a move back below this level;
• Buy after a failed breakout below 1.3396, on a move back above this level;

AUD/USD:

• Sell after a failed breakout above 0.7075, on a move back below this level;
• Buy after a failed breakout below 0.7055, on a move back above this level;

USD/CAD:

• Sell after a failed breakout above 1.4016, on a move back below this level;
• Buy after a failed breakout below 1.3991, on a move back above this level;