01.08.202519:31 Forex Analysis & Reviews: Level and Target Adjustments for the U.S. Session – August 1st

The euro was effectively traded using the Mean Reversion strategy, while the Japanese yen and the British pound followed the Momentum strategy.

The eurozone and UK manufacturing PMI indices were revised downward, which prevented both the euro and the pound from showing any growth even in the first half of the day. Weak data from Europe intensified concerns about slowing economic growth in the region. Investors are increasingly worried that the European Central Bank's decision to hold off on rate cuts could push the economy toward recession. The same applies to the UK, where the central bank is hesitant to ease policy, fearing another surge in inflation triggered by Trump's tariffs.

In the second half of the day, the market will receive U.S. data on nonfarm payrolls, the unemployment rate, and average hourly earnings. This data package, known as the Nonfarm Payrolls, traditionally has a strong impact on currency markets, and today is unlikely to be an exception.

The employment change figure will be especially important, as it provides insight into the pace of job creation. Strong job growth may indicate a healthy economy and support the Fed in maintaining interest rates, which would benefit the dollar. The unemployment rate is another key indicator, reflecting overall labor market conditions. A decline in unemployment is typically seen as a positive sign, indicating more people are finding work.

Average hourly earnings serve as an indicator of inflationary pressure. Rising wages can stimulate consumer spending and lead to higher prices. If wage growth exceeds expectations, the Fed may adopt a more aggressive stance to contain inflation, once again supporting the dollar.

In case of strong data, I will focus on implementing the Momentum strategy. If the market does not react to the data, I will continue to use the Mean Reversion strategy.

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

EUR/USD

• Buying a breakout above 1.1420 may lead to growth toward 1.1470 and 1.1533
• Selling a breakout below 1.1395 may lead to a decline toward 1.1370 and 1.1343

GBP/USD

• Buying a breakout above 1.3180 may lead to growth toward 1.3230 and 1.3273
• Selling a breakout below 1.3135 may lead to a decline toward 1.3100 and 1.3045

USD/JPY

• Buying a breakout above 150.50 may lead to growth toward 150.90 and 151.30
• Selling a breakout below 150.18 may lead to a drop toward 149.70 and 149.20

Mean Reversion Strategy (Pullback) for the Second Half of the Day:

EUR/USD

• I will look to sell after a failed breakout above 1.1452, once the price returns below that level
• I will look to buy after a failed breakout below 1.1387, once the price returns to that level

GBP/USD

• I will look to sell after a failed breakout above 1.3185, once the price returns below that level
• I will look to buy after a failed breakout below 1.3116, once the price returns to that level

AUD/USD

• I will look to sell after a failed breakout above 0.6448, once the price returns below that level
• I will look to buy after a failed breakout below 0.6416, once the price returns to that level

USD/CAD

• I will look to sell after a failed breakout above 1.3891, once the price returns below that level
• I will look to buy after a failed breakout below 1.3845, once the price returns to that level