11.08.202608:23 Forex Analysis & Reviews: Intraday Strategies for Beginner Traders on August 11

The euro continued its correction against the dollar, while the pound managed to hold its position, updating its weekly high and thereby maintaining the chances of a further establishment of a bullish trend.

Yesterday, amid the absence of important US fundamental data, market attention was drawn to an interview with Beth Hammack, President of the Cleveland Federal Reserve Bank. She stated that several rate hikes may be required to bring inflation back to the 2% target, and such hawkish rhetoric partly contributed to the strengthening of the dollar and the decline in risk assets. Comments from Fed officials are valuable, as they provide insight into the central bank's sentiment; in the absence of data, the weight of each word increases significantly. It should be noted that Hammack was previously among those calling for immediate tightening of policy, so her position appears consistent. For the euro, this signal resulted in pressure. The hawkish stance of one of the Fed's voting members strengthened expectations for a higher rate, increased the dollar's appeal, and undermined demand for riskier assets.

Today, the only report from the eurozone will be Italy's trade balance, so we do not expect a surge in volatility. The trade balance reflects the difference between exports and imports and influences currency demand in the long term, but as a short-term driver, it is ineffective, especially since it pertains only to a single economy within the bloc. Such a release usually does not elicit a significant response in the single currency. In the absence of substantial reasons, it is quite probable that the EUR/USD pair will continue its downward correction. Until the euro has strong drivers of its own, the dollar's initiative remains, and the single currency's recent retracement risks continuing.

On the other hand, today's absence of reports from the UK in the first half of the day could support the pound. Without fresh figures on inflation, employment, or business activity, traders will have no reason to revise their positions, as these indicators typically manage expectations for the Bank of England's rate and determine the direction of the British currency. When there are no independent benchmarks, the pound becomes dependent on external forces, with the market sentiment towards the dollar being the main guide. Thus, pound buyers retain a good chance of continuing a bull market. The absence of negative domestic news makes it easier for the GBP/USD pair to maintain a bullish sentiment and extend its recent upswing.

If the data align with economists' expectations, it is better to act based on the Mean Reversion strategy. If the data are significantly higher or lower than economists' expectations, it is best to use the Momentum strategy.

Momentum Strategy (Breakout):

For EUR/USD

• Buying on a breakout of 1.1554 may lead to the euro rising toward 1.1579 and 1.1620;
• Selling on a breakout of 1.1530 may lead to the euro falling toward 1.1515 and 1.1500;

For GBP/USD

• Buying on a breakout of 1.3527 may lead to the pound rising toward 1.3554 and 1.3581;
• Selling on a breakout of 1.3490 may lead to the pound falling toward 1.3464 and 1.3435;

For USD/JPY

• Buying on a breakout of 159.39 may lead to the dollar rising toward 159.60 and 159.83;
• Selling on a breakout of 159.13 may lead to dollar sell-offs toward 158.83 and 158.57;

Mean Reversion Strategy (Return):

For EUR/USD

• I will look for short positions after a failed breakout above 1.1553 when the price returns below that level;
• I will look for long positions after a failed breakout above 1.1535 when the price returns to that level;

For GBP/USD

• I will look for shorts after a failed breakout above 1.3517 when the price returns below that level;
• I will look for longs after a failed breakout above 1.3492 when the price returns to that level;

For AUD/USD

• I will look for shorts after a failed breakout above 0.7065 when the price returns below that level;
• I will look for longs after a failed breakout above 0.7035 when the price returns to that level;

For USD/CAD

• I will look for shorts after a failed breakout above 1.3945 when the price returns below that level;
• I will look for longs after a failed breakout above 1.3920 when the price returns to that level;