17.02.202612:26 Forex Analysis & Reviews: Level and Target Adjustments for the U.S. Session – February 17th

Today, the euro and the Australian dollar were traded using the Mean Reversion strategy. The British pound was traded using the Momentum strategy.

Inflation in Germany continued to decline and matched economists' forecasts, which put only slight pressure on the euro. The slowdown in inflation is primarily due to weaker growth in prices for services and energy. Overall, inflationary pressure in Germany is easing fairly quickly, allowing the ECB to take a more accommodative stance. As noted earlier, the currency market reaction to the German inflation data was muted. The euro showed a minor decline against the U.S. dollar but quickly recovered. It is clear that traders had already priced in these inflation figures, and the news did not trigger significant volatility.

In the second half of the day, a series of important economic releases is expected, which may significantly influence the direction of financial markets. First, the weekly employment change data from Automatic Data Processing will be released. Although this indicator is not a direct reflection of official unemployment data, it often serves as a signal of upcoming trends and provides insight into the condition of the U.S. labor market. Economists closely monitor employment changes, as they are directly linked to consumer spending and overall economic growth.

This will be followed by the release of the Empire Manufacturing Index. This index, which tracks business activity in New York State's manufacturing sector, is an important leading indicator of industrial conditions. Changes in its readings may signal shifts in production orders, employment, and pricing within the manufacturing sector.

In addition to economic data, market participants will closely monitor speeches by members of the Federal Open Market Committee. Remarks are expected from FOMC members Michael S. Barr and Mary Daly. Their comments on the current state of the economy, inflation outlook, and especially the direction of monetary policy may significantly affect market expectations.

If the data are strong, I will rely on the Momentum strategy. If there is no significant market reaction, 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 1.1850 may lead to a rise toward 1.1878 and 1.1905.
• Selling on a breakout below 1.1835 may lead to a decline toward 1.1804 and 1.1769.

For GBP/USD

• Buying on a breakout above 1.3600 may lead to a rise toward 1.3631 and 1.3667.
• Selling on a breakout below 1.3575 may lead to a decline toward 1.3550 and 1.3480.

For USD/JPY

• Buying on a breakout above 153.10 may lead to a rise toward 153.55 and 154.00.
• Selling on a breakout below 152.70 may lead to a decline toward 152.45 and 152.10.

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

For EUR/USD

• I will look for selling opportunities after a failed breakout above 1.1856 followed by a return below this level.
• I will look for buying opportunities after a failed breakout below 1.1826 followed by a return to this level.

For GBP/USD

• I will look for selling opportunities after a failed breakout above 1.3612 followed by a return below this level.
• I will look for buying opportunities after a failed breakout below 1.3563 followed by a return to this level.

For AUD/USD

• I will look for selling opportunities after a failed breakout above 0.7082 followed by a return below this level.
• I will look for buying opportunities after a failed breakout below 0.7056 followed by a return to this level.

For USD/CAD

• I will look for selling opportunities after a failed breakout above 1.3654 followed by a return below this level.
• I will look for buying opportunities after a failed breakout below 1.3633 followed by a return to this level.