Level and Target Adjustments for the U.S. Session – March 3rd

The euro and the British pound were traded very successfully today using the Momentum strategy. I did not trade using Mean Reversion, as I was expecting strong movements.

The euro, the pound, and other risk assets continued to decline following reports that the United States is only intensifying its military attacks on Iran, which is responding with countermeasures and has already closed the Strait of Hormuz. It is obvious that tensions in the Middle East have reached a new peak, which has triggered another wave of sell-offs. Many market participants agree that further weakening of risk assets is quite likely if the situation in the Middle East continues to deteriorate.

During the U.S. session, no significant macroeconomic statistics are expected that could have a substantial impact on market dynamics. The only indicator to be released is the RCM/TIPP Economic Optimism Index. Although this indicator reflects consumer and business sentiment, it is usually not a key driver of market movements on days lacking fundamental news. In the absence of other important economic data, all attention will be focused on speeches by two influential members of the Federal Reserve's Federal Open Market Committee (FOMC) — John Williams and Neel Kashkari. Their comments may contain valuable signals regarding future U.S. monetary policy, including possible further steps on interest rate changes.

In case of strong data, 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

• Buy on a breakout above 1.1634, which could lead to growth toward 1.1672 and 1.1711;
• Sell on a breakout below 1.1592, which could lead to a decline toward 1.1553 and 1.1527;

For GBP/USD

• Buy on a breakout above 1.3316, which could lead to growth toward 1.3360 and 1.3409;
• Sell on a breakout below 1.3270, which could lead to a decline toward 1.3237 and 1.3206;

For USD/JPY

• Buy on a breakout above 157.69, which could lead to dollar growth toward 157.93 and 158.28;
• Sell on a breakout below 157.40, which could lead to dollar selling toward 157.05 and 156.73;

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

For EUR/USD

• I will look for selling opportunities after a failed breakout above 1.1651 with a return below this level;
• I will look for buying opportunities after a failed breakout below 1.1582 with a return above this level;

For GBP/USD

• I will look for selling opportunities after a failed breakout above 1.3339 with a return below this level;
• I will look for buying opportunities after a failed breakout below 1.3251 with a return above this level;

For AUD/USD

• I will look for selling opportunities after a failed breakout above 0.7078 with a return below this level;
• I will look for buying opportunities after a failed breakout below 0.7019 with a return above this level;

For USD/CAD

• I will look for selling opportunities after a failed breakout above 1.3735 with a return below this level;
• I will look for buying opportunities after a failed breakout below 1.3679 with a return above this level.