Level and Target Adjustments for the U.S. Session – September 8th

[Ben Graham]

Today, trading the euro and pound through the Mean Reversion strategy was difficult. Using Momentum, I only traded the Japanese yen, which rose sharply against the U.S. dollar.

Strong data on German industrial production supported the euro in the first half of the day. The pound also attempted to rise, but these moves were not very successful.

It seems traders preferred to lock in profits after the initial optimism caused by expectations of Fed rate cuts, offsetting the positive impact of individual macroeconomic indicators.

Technically, the EUR/USD pair is consolidating in a narrow range, not yet showing a clear direction. A breakout of the upper boundary could open the way for further growth, while a break below support may lead to a decline in quotes.

However, in the second half of the day the economic calendar does not suggest major shocks. The release of U.S. consumer credit data is of interest but is unlikely to be the catalyst that can radically change the euro's trajectory. These figures usually carry less weight than inflation or labor market data. Still, even minor fluctuations in consumer credit may provide some insight into Americans' willingness to spend, which in turn can indirectly influence expectations of U.S. economic growth. Nevertheless, stronger fundamental drivers are needed for significant euro strengthening. Investors may be waiting for new signals from the ECB and the Fed, but with central bank meetings approaching, such signals are unlikely. In the absence of major catalysts, the euro will likely continue to consolidate within the current range, subject only to minor fluctuations driven by speculative trades or technical factors.

If strong data is released, I will rely on the Momentum strategy. If the market shows no reaction to the data, I will continue using the Mean Reversion strategy.

Momentum strategy (breakout) for the second half of the day:

EUR/USD

• Buying on a breakout of 1.1740 may lead to growth toward 1.1781 and 1.1825;
• Selling on a breakout of 1.1710 may lead to a decline toward 1.1665 and 1.1634.

GBP/USD

• Buying on a breakout of 1.3520 may lead to growth toward 1.3550 and 1.3587;
• Selling on a breakout of 1.3495 may lead to a decline toward 1.3451 and 1.3416.

USD/JPY

• Buying on a breakout of 147.90 may lead to growth toward 148.44 and 148.75;
• Selling on a breakout of 147.60 may lead to dollar sell-offs toward 147.35 and 147.00.

Mean Reversion strategy (pullback) for the second half of the day:

EUR/USD

• I will look for selling opportunities after a failed breakout above 1.1748 and a return below this level;
• I will look for buying opportunities after a failed breakout below 1.1704 and a return above this level.

GBP/USD

• I will look for selling opportunities after a failed breakout above 1.3535 and a return below this level;
• I will look for buying opportunities after a failed breakout below 1.3485 and a return above this level.

AUD/USD

• I will look for selling opportunities after a failed breakout above 0.6606 and a return below this level;
• I will look for buying opportunities after a failed breakout below 0.6555 and a return above this level.

USD/CAD

• I will look for selling opportunities after a failed breakout above 1.3838 and a return below this level;
• I will look for buying opportunities after a failed breakout below 1.3803 and a return above this level.

The material has been provided by InstaForex Company - www.instaforex.com