27.07.202613:20 Forex Analysis & Reviews: Level and Target Adjustments for the U.S. Session – July 27th

The British pound was traded today using the Momentum strategy. I applied the Mean Reversion strategy to the euro, but without any significant results.

According to the latest data, the Ifo Expectations Index rose to 86.7 from the revised previous-month reading of 84.3, exceeding the forecasts of all survey participants. This component reflects German business sentiment regarding the outlook for the coming months, and its strong increase signals growing optimism in the eurozone's largest economy. Since Ifo surveys are considered one of the key indicators of business sentiment in the region, the strong result supported expectations of economic resilience. However, unfortunately, it did not benefit the single currency.

During the second half of the day, market attention will shift to US data on Durable Goods Orders. This indicator reflects the volume of orders for long-lasting goods, such as machinery, equipment, and transport vehicles, and is considered an important measure of investment activity and business confidence. Since companies typically make large purchases only when they have an optimistic outlook for the future, rising orders indicate economic strength and support the US dollar through expectations regarding Federal Reserve interest rate policy. A strong reading could provide additional support for the US currency by strengthening the case against an imminent policy easing cycle. For the euro and the pound, this would create additional challenges. Conversely, a weak result would weaken the US dollar and give both European currencies a chance to hold at least their current levels.

If the economic data is strong, I will rely on the Momentum strategy. If the market does not react to the data, I will continue using the Mean Reversion strategy.

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

EUR/USD

• Buy: A breakout above 1.1402 may lead to a rise in the euro towards 1.1422 and 1.1442.
• Sell: A breakout below 1.1385 may lead to a decline in the euro towards 1.1365 and 1.1345.

GBP/USD

• Buy: A breakout above 1.3339 may lead to a rise in the pound towards 1.3363 and 1.3388.
• Sell: A breakout below 1.3310 may lead to a decline in the pound towards 1.3290 and 1.3265.

USD/JPY

• Buy: A breakout above 163.76 may lead to a rise in the US dollar towards 163.99 and 164.26.
• Sell: A breakout below 163.48 may lead to a decline in the US dollar towards 163.18 and 162.92.

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

EUR/USD

• Sell: I will look for short positions after a failed breakout above 1.1420 followed by a return below this level.
• Buy: I will look for long positions after a failed breakout below 1.1385 followed by a return to this level.

GBP/USD

• Sell: I will look for short positions after a failed breakout above 1.3339 followed by a return below this level.
• Buy: I will look for long positions after a failed breakout below 1.3304 followed by a return to this level.

AUD/USD

• Sell: I will look for short positions after a failed breakout above 0.7014 followed by a return below this level.
• Buy: I will look for long positions after a failed breakout below 0.6994 followed by a return to this level.

USD/CAD

• Sell: I will look for short positions after a failed breakout above 1.4114 followed by a return below this level.
• Buy: I will look for long positions after a failed breakout below 1.4084 followed by a return to this level.