03.06.202613:20 Forex Analysis & Reviews: Level and Target Adjustments for the U.S. Session – June 3

The euro and the British pound were traded today using the Mean Reversion strategy, but no meaningful corrective moves developed. I did not take any trades using the Momentum strategy.

Despite services PMI data from the Eurozone and the United Kingdom coming in above economists' forecasts, neither the euro nor the pound posted strong gains. This suggests that, despite some positive signals, the sector remains in a state of contraction. Of particular concern is the fact that weak performance is being observed not only in individual countries but also across the European Union as a whole.

The key factors behind the negative dynamics remain elevated inflation, driven by higher energy and commodity prices, as well as the high probability of further monetary policy tightening. In addition, geopolitical uncertainty related to the ongoing conflict in the Middle East and its impact on global supply chains continues to weigh on sentiment.

Attention now turns to a busy economic calendar, which is expected to bring a significant amount of important data and public remarks. One of the key indicators attracting market attention will be the U.S. ADP Employment Change report for May. This indicator is often viewed as a precursor to the official labor market data and serves as a barometer of labor market conditions and their potential impact on Federal Reserve monetary policy.

Following the employment data, the ISM Services PMI will be released. This index reflects conditions in one of the most important sectors of the U.S. economy, which accounts for a substantial share of GDP.

In addition, public remarks from Federal Reserve officials always attract considerable market attention. Later in the day, FOMC member Michael S. Barr, known for his balanced stance, will share his assessment of current economic conditions and the outlook for monetary policy. His comments may provide further insight into potential changes in the Federal Reserve's strategy regarding interest rates and other policy tools. At the same time, remarks from U.S. Treasury Secretary Scott Bessent will add another important element for market analysis.

Careful assessment of the released data and officials' comments will allow traders to formulate more accurate forecasts and make informed decisions in a challenging market environment.

If the economic data is strong, I will rely on the Momentum strategy. If the market shows little reaction to the releases, I will continue using the Mean Reversion strategy.

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

For EUR/USD

• Buying on a breakout above 1.1630 may lead to a rise toward 1.1655 and 1.1684;
• Selling on a breakout below 1.1606 may lead to a decline toward 1.1579 and 1.1555.

For GBP/USD

• Buying on a breakout above 1.3478 may lead to a rise toward 1.3510 and 1.3535;
• Selling on a breakout below 1.3440 may lead to a decline toward 1.3410 and 1.3370.

For USD/JPY

• Buying on a breakout above 159.85 may lead to a rise toward 159.99 and 160.12;
• Selling on a breakout below 159.60 may lead to a decline toward 159.40 and 159.20.

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

For EUR/USD

• I will look for selling opportunities after a failed breakout above 1.1630 followed by a return below this level;
• I will look for buying opportunities after a failed breakout below 1.1605 followed by a return above this level.

For GBP/USD

• I will look for selling opportunities after a failed breakout above 1.3465 followed by a return below this level;
• I will look for buying opportunities after a failed breakout below 1.3432 followed by a return above this level.

For AUD/USD

• I will look for selling opportunities after a failed breakout above 0.7183 followed by a return below this level;
• I will look for buying opportunities after a failed breakout below 0.7160 followed by a return above this level.

For USD/CAD

• I will look for selling opportunities after a failed breakout above 1.3862 followed by a return below this level;
• I will look for buying opportunities after a failed breakout below 1.3839 followed by a return above this level.