16.06.202613:09 Forex Analysis & Reviews: Level and Target Adjustments for the U.S. Session – June 16th

Today, only the Australian dollar generated a signal under the Momentum strategy. I did not take any trades based on the Mean Reversion strategy.

Today's data from Germany and Italy supported the euro during the first half of the day, with the British pound following suit. Strong ZEW indices undoubtedly encouraged traders, pointing to a potential recovery in the eurozone economy.

However, a closer look at other economic indicators shows that optimism surrounding Iran has yet to be reflected in the actual data. Industrial production, retail sales, and unemployment figures in Germany and Italy continue to indicate stagnation or even slight deterioration. This creates a disconnect between expectations and current economic conditions, prompting analysts to assess the outlook with caution. As a result, the European economy remains in a state of uncertainty. On the one hand, there are hopes for improvement, supported by positive sentiment and several modest positive developments. On the other hand, fundamental indicators continue to point to persistent challenges.

In the second half of the day, the United States is scheduled to release data on building permits and housing starts. These indicators are among the key measures of activity in the housing market and, consequently, have a significant impact on the overall U.S. economy. An increase in building permits and housing starts typically signals growing confidence among developers, although achieving such growth in the current high-interest-rate environment will be challenging. In turn, stronger activity in the construction sector supports related industries such as building materials manufacturing, logistics, furniture production, and services, contributing to broader economic growth. Conversely, weaker figures may indicate a slowdown in construction activity, likely linked to tighter monetary policy.

If the data comes in strong, I will rely on the Momentum strategy. If the market shows little or no reaction to the releases, I will continue to use the Mean Reversion strategy.

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

For EUR/USD

• A breakout above 1.1620 may lead to euro growth toward 1.1645 and 1.1664;
• A breakout below 1.1595 may lead to a decline toward 1.1566 and 1.1535;

For GBP/USD

• A breakout above 1.3435 may lead to pound growth toward 1.3460 and 1.3490;
• A breakout below 1.3410 may lead to a decline toward 1.3380 and 1.3360;

For USD/JPY

• A breakout above 160.40 may lead to dollar growth toward 160.65 and 160.99;
• A breakout below 160.25 may trigger a decline toward 160.02 and 159.80;

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

For EUR/USD

• I will look for short positions after a failed breakout above 1.1629 followed by a return below this level;
• I will look for long positions after a failed breakout below 1.1583 followed by a return above this level;

For GBP/USD

• I will look for short positions after a failed breakout above 1.3447 followed by a return below this level;
• I will look for long positions after a failed breakout below 1.3391 followed by a return above this level;

For AUD/USD

• I will look for short positions after a failed breakout above 0.7093 followed by a return below this level;
• I will look for long positions after a failed breakout below 0.7061 followed by a return above this level;

For USD/CAD

• I will look for short positions after a failed breakout above 1.4010 followed by a return below this level;
• I will look for long positions after a failed breakout below 1.3985 followed by a return above this level.