06.05.202612:37 Forex Analysis & Reviews: Level and Target Adjustments for the U.S. Session – May 6th

Today, the euro and the British pound were traded using the Momentum strategy. I did not use the Mean Reversion strategy.

The euro and the pound reacted with strong gains to news that the United States and Iran are approaching the signing of a memorandum to end the war. This long-awaited breakthrough is expected to put an end to tensions and conflicts in one of the most strategically important regions in the world. Such developments would have a significant positive impact on the global economy by reducing uncertainty and supporting the recovery of trade flows. In the near term, further strengthening of the euro, the British pound, and other risk assets is expected as more details of the memorandum become clear over the next 48 hours, since everything now depends on Iran.

In the second half of the day, global financial markets will focus on the release of U.S. ADP private-sector employment data. This indicator, one of the leading forward-looking measures of the labor market, can significantly influence expectations for the upcoming Nonfarm Payrolls report, released on the first Friday of each month. Strong ADP data typically signals a robust labor market and may support the U.S. dollar. Conversely, weak data could raise concerns about slowing economic growth and put pressure on the dollar.

At the same time, speeches are expected from two influential members of the Federal Open Market Committee (FOMC): Alberto Musalem and Austan D. Goolsbee. Their comments on the current economic situation, inflation trends, and the outlook for monetary policy will be closely analyzed by traders and economists. Particular attention will be paid to any hints regarding future interest rate decisions, as FOMC members' speeches often serve as a barometer of sentiment within the central bank.

If the data is strong, 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

For EUR/USD

• Buying on a breakout above 1.1784 may lead to a rise toward 1.1804 and 1.1825;
• Selling on a breakout below 1.1756 may lead to a decline toward 1.1726 and 1.1701;

For GBP/USD

• Buying on a breakout above 1.3627 may lead to a rise toward 1.3654 and 1.3683;
• Selling on a breakout below 1.3598 may lead to a decline toward 1.3567 and 1.3539;

For USD/JPY

• Buying on a breakout above 156.33 may lead to a rise toward 156.73 and 157.05;
• Selling on a breakout below 156.90 may lead to a decline toward 155.56 and 155.23;

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

For EUR/USD

• Look for selling opportunities after a false breakout above 1.1790 with a return below this level;
• Look for buying opportunities after a false breakout below 1.1748 with a return to this level;

For GBP/USD

• Look for selling opportunities after a false breakout above 1.3644 with a return below this level;
• Look for buying opportunities after a false breakout below 1.3598 with a return to this level;

For AUD/USD

• Look for selling opportunities after a false breakout above 0.7281 with a return below this level;
• Look for buying opportunities after a false breakout below 0.7244 with a return to this level;

For USD/CAD

• Look for selling opportunities after a false breakout above 1.3602 with a return below this level;
• Look for buying opportunities after a false breakout below 1.3577 with a return to this level;