Level and Target Adjustments for the U.S. Session – September 17th

[Ben Graham]

Today, the pound and the Australian dollar were traded using the Mean Reversion strategy. I tried to trade the yen through Momentum, but the result was mediocre.

The released data showing a decline in the Consumer Price Index in the eurozone put pressure on the euro. However, falling inflation is not an unconditional signal for policy easing. Observers note that the slowdown in consumer price growth may be driven not only by the ECB's effective measures but also by weaker economic growth in the region and external factors such as lower energy prices. In this context, a premature rate cut could lead to undesirable consequences, something some ECB representatives have recently emphasized.

UK inflation data also did not change the balance in GBP/USD, as the results matched economists' forecasts.

In the second half of the day, the Fed is expected to cut the interest rate, most likely by a quarter point. But more important are the projections to be published. The rate cut, though anticipated, is only a small part of the complex puzzle traders have to solve. The true key lies in the details—in the carefully worded statements in the minutes, in subtle hints about future actions, and in the individual forecasts of committee members. Every word from Chair Powell will be examined under a microscope, and every change in the economic projections will trigger speculation. The market seeks clarity: does the Fed intend to continue a dovish easing policy, or was this a one-off step?

In addition, it is important to consider the geopolitical environment. Trade wars, political instability, and the unpredictability of global economic processes add uncertainty, forcing the Fed to act cautiously and flexibly. Will the U.S. regulator be able to balance domestic economic needs and external shocks, or will its actions lead to undesirable consequences? It remains to be seen.

In the case of strong statistics, I will rely on the Momentum strategy. If the market shows no reaction to the data, 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 of 1.1862 may lead to growth toward 1.1903 and 1.1937;
• Selling on a breakout of 1.1830 may lead to a decline toward 1.1790 and 1.1750;

For GBP/USD

• Buying on a breakout of 1.3667 may lead to growth toward 1.3707 and 1.3746;
• Selling on a breakout of 1.3625 may lead to a decline toward 1.3590 and 1.3555;

For USD/JPY

• Buying on a breakout of 146.70 may lead to growth toward 147.40 and 147.72;
• Selling on a breakout of 146.20 may lead to a decline toward 145.70 and 145.20;

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

For EUR/USD

• I will look for sales after a failed breakout above 1.1867 and a return below this level;
• I will look for purchases after a failed breakout below 1.1828 and a return above this level;

For GBP/USD

• I will look for sales after a failed breakout above 1.3657 and a return below this level;
• I will look for purchases after a failed breakout below 1.3623 and a return above this level;

For AUD/USD

• I will look for sales after a failed breakout above 0.6682 and a return below this level;
• I will look for purchases after a failed breakout below 0.6666 and a return above this level;

For USD/CAD

• I will look for sales after a failed breakout above 1.3765 and a return below this level;
• I will look for purchases after a failed breakout below 1.3741 and a return above this level.

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