22.04.202612:33 Forex Analysis & Reviews: Level and Target Adjustments for the U.S. Session – April 22nd

Today, the British pound and the Canadian dollar performed very well using the Mean Reversion strategy. I did not execute any trades using the Momentum strategy.

The lack of clear drivers led the EUR/USD pair to trade within a narrow sideways range during the first half of the day. The British pound also remained relatively calm, as the UK Consumer Price Index data for March came in only slightly above economists' forecasts. This key inflation indicator showed an acceleration compared to previous months; however, the main reason was the U.S. military actions in the Middle East, which are now gradually approaching their conclusion.

However, it is important to understand that the increase in consumer prices above analysts' expectations signaled the possibility of tighter monetary policy from the Bank of England. In conditions of elevated inflation, central banks often consider raising interest rates as a tool to contain it. This, in turn, makes the national currency—in this case, the pound—more attractive.

The market's future direction will be determined by any news related to either rising tensions or de-escalation in the Middle East. The prospect of a truce between the U.S. and Iran carries the potential for significant changes. On one hand, it may lead to stabilization in energy prices and reduced demand for the U.S. dollar, which typically supports risk assets, including the euro. On the other hand, the uncertain negotiation process and its details may continue to maintain market volatility.

Traders are likely to adopt a wait-and-see approach, avoiding aggressive positions until a clearer picture emerges.

If strong data is released, 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 on a breakout above 1.1765 – targets: 1.1800 and 1.1830
• Sell on a breakout below 1.1740 – targets: 1.1720 and 1.1705

GBP/USD

• Buy on a breakout above 1.3545 – targets: 1.3575 and 1.3600
• Sell on a breakout below 1.3510 – targets: 1.3475 and 1.3440

USD/JPY

• Buy on a breakout above 159.40 – targets: 159.65 and 159.84
• Sell on a breakout below 159.15 – targets: 158.87 and 158.57

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

EUR/USD

• Look for sells after a failed breakout above 1.1768 with a return below this level
• Look for buys after a failed breakout below 1.1734 with a return to this level

GBP/USD

• Look for sells after a failed breakout above 1.3541 with a return below this level
• Look for buys after a failed breakout below 1.3505 with a return to this level

AUD/USD

• Look for sells after a failed breakout above 0.7183 with a return below this level
• Look for buys after a failed breakout below 0.7155 with a return to this level

USD/CAD

• Look for sells after a failed breakout above 1.3660 with a return below this level
• Look for buys after a failed breakout below 1.3639 with a return to this level