21.08.202612:56 Forex-elemzések és áttekintések: Level and Target Adjustments for the U.S. Session – August 21

The British pound performed reasonably well today using the Mean Reversion strategy. I also tried trading the yen and the Canadian dollar using Momentum.

The euro and the pound rose on strong PMI data. The eurozone Manufacturing PMI jumped to 52.8, the Composite PMI rose to 52.1, while Services PMI came in at 51.7. The report noted that demand for artificial intelligence equipment, defense orders benefiting Germany, and tourism driving growth in services outside Germany and France made a significant contribution to the increase in the indicators. For the ECB, the conclusion was unexpectedly hawkish. With GDP growing steadily at around 0.3% in the third quarter, hiring recovering, and inflation still elevated, the hawkish bias is likely to persist, and further rate hikes in the near term cannot be ruled out. The euro reacted to this with another rise today.

The British economy also accelerated in August. The Composite PMI rose to 52.5 from 52.2, a four-month high, while Services PMI jumped to 52.8 from 52.1. Let me remind you that PMI indices are based on surveys of companies and reflect business activity, with the 50-point mark separating expansion from contraction. Services are particularly important for the UK, as they account for the largest share of the economy. Manufacturing, meanwhile, weakened, with the Manufacturing PMI falling to 51.5.

In the second half of the day, the market is awaiting similar data from the United States, namely the August PMIs for manufacturing, services, and the composite index. The market will use these data to assess the resilience of the economy and adjust expectations for the Fed's interest rate. As in the eurozone, where business activity accelerated noticeably in August, strong U.S. data could help the dollar strengthen at the end of the week. For the euro and the pound, this means a risk of a pullback, as a stronger dollar would weigh on EUR/USD and GBP/USD. Nevertheless, such declines in the pairs could be viewed as an opportunity to initiate new long positions in risk assets at more attractive levels if the fundamental outlook remains supportive.

If the data are strong, I will rely on 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:

For EUR/USD

• Buying on a breakout above 1.1710 could lead to a rise in the euro toward 1.1745 and 1.165.
• Selling on a breakout below 1.1685 could lead to a decline in the euro toward 1.1660 and 1.1638.

For GBP/USD

• Buying on a breakout above 1.3672 could lead to a rise in the pound toward 1.3700 and 1.3725.
• Selling on a breakout below 1.3645 could lead to a decline in the pound toward 1.3620 and 1.3590.

For USD/JPY

• Buying on a breakout above 158.83 could lead to a rise in the dollar toward 159.13 and 159.39.
• Selling on a breakout below 158.28 could lead to a sell-off in the dollar toward 159.93 and 157.60.

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

For EUR/USD

• I will look for selling opportunities after a failed move above 1.1715, followed by a return below this level.
• I will look for buying opportunities after a failed move below 1.1690, followed by a return to this level.

For GBP/USD

• I will look for selling opportunities after a failed move above 1.3676, followed by a return below this level.
• I will look for buying opportunities after a failed move below 1.3643, followed by a return to this level.

For AUD/USD

• I will look for selling opportunities after a failed move above 0.7175, followed by a return below this level.
• I will look for buying opportunities after a failed move below 0.7152, followed by a return to this level.

For USD/CAD

• I will look for selling opportunities after a failed move above 1.3762, followed by a return below this level.
• I will look for buying opportunities after a failed move below 1.3733, followed by a return to this level.