26.05.202515:05 Forex Analysis & Reviews: Level and Target Adjustments for the U.S. Session on May 26th

Given the sharp decline in the euro and the modest movement in the pound, using a Mean Reversion strategy for either was not advisable. Only the yen showed a clear reaction to the Momentum strategy, but even there, a significant drop failed to materialize.

The brief rally in the euro, triggered by Trump's remarks about temporarily suspending new tariffs on the European Union, was quickly replaced by a steep decline. Market sentiment has turned pessimistic regarding the prospects of a trade deal, with the dominant view being that the EU is simply stalling while pretending to negotiate. Despite optimistic official statements, traders' confidence in a mutually beneficial agreement is fading. They seem to be factoring in internal political challenges within the EU, where reaching consensus among member states is a complex task. Furthermore, past trade negotiation experiences with the U.S. suggest that the Trump administration is not inclined to make concessions, often relying on aggressive pressure tactics.

Unfortunately, there is no economic data scheduled for the second half of the day, so strong volatility is unlikely. All attention is focused on tomorrow, when key U.S. economic indicators will be released. These reports will likely determine the next direction of the currency market. As a result, a wait-and-see approach and risk aversion will prevail today, and trading volumes are expected to decline noticeably.

If the data is strong, I will rely on Momentum breakout strategies. If the market does not react, I will continue using Mean Reversion strategies.

Momentum Strategy (Breakout-Based) for the Second Half of the Day:

EUR/USD

• Buy on a breakout above 1.1397, with targets at 1.1420 and 1.1453
• Sell on a breakout below 1.1375, with targets at 1.1334 and 1.1300

GBP/USD

• Buy on a breakout above 1.3570, with targets at 1.3590 and 1.3615
• Sell on a breakout below 1.3545, with targets at 1.3510 and 1.3474

USD/JPY

• Buy on a breakout above 143.06, with targets at 143.45 and 143.71
• Sell on a breakout below 142.75, with targets at 142.32 and 142.00

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

EUR/USD

• Look for short positions after a failed breakout above 1.1434, followed by a return below this level
• Look for long positions after a failed breakout below 1.1358, followed by a return above this level

GBP/USD

• Look for short positions after a failed breakout above 1.3592, followed by a return below this level
• Look for long positions after a failed breakout below 1.3544, followed by a return above this level

AUD/USD

• Look for short positions after a failed breakout above 0.6538, followed by a return below this level
• Look for long positions after a failed breakout below 0.6493, followed by a return above this level

USD/CAD

• Look for short positions after a failed breakout above 1.3734, followed by a return below this level
• Look for long positions after a failed breakout below 1.3681, followed by a return above this level