The U.S. Dollar Rose Against the Pound and Yen, but Lost Ground Against the Euro

Dovish statements from Federal Reserve officials about further interest rate cuts put pressure on the dollar, though not across all currencies. Yesterday, discussions suggested that the Fed may conclude its balance sheet reduction program—also known as quantitative tightening—as early as next Wednesday, further weakening the U.S. dollar.

Today is packed with statistical data, and in the first half of the day, attention will be on the Eurozone's manufacturing, services, and composite PMIs for October.

These indicators serve as a barometer of the region's economic health, providing insights into the current state of the manufacturing and services sectors and overall business sentiment. Their influence on the currency markets can be significant, especially if actual values diverge from forecasts. If the data exceed expectations, the euro could strengthen; otherwise, pressure on the euro may persist.

The composite PMI will attract the most attention as an integrated indicator. It reflects the balance between the manufacturing and services sectors. If it comes in higher than expected, it may spark optimism and lead to growth in risk assets. If not, traders may respond negatively.

Regarding the British pound, the same data is scheduled for release today. However, before that, the retail sales volume report will be published—an indicator that reflects consumer activity and is therefore an important signal of economic health. A rise in retail sales usually indicates an improved economic climate, whereas a decline may suggest a slowdown or even a downturn.

If the data matches economists' expectations, the best approach is to use the Mean Reversion strategy. If the data is significantly above or below expectations, the Momentum strategy is recommended.

Strategy: Momentum (Breakout Trading)

EUR/USD

Buy on a breakout above 1.1620. Target levels: 1.1645 and 1.1675

Sell on a breakout below 1.1600. Target levels: 1.1575 and 1.1545

GBP/USD

Buy on a breakout above 1.3335. Target levels: 1.3350 and 1.3375

Sell on a breakout below 1.3310. Target levels: 1.3280 and 1.3260

USD/JPY

Buy on a breakout above 153.10. Target levels: 153.45 and 153.84

Sell on a breakout below 152.85. Target levels: 152.60 and 152.10

Strategy: Mean Reversion (Rebound from Failed Breakout)

EUR/USD

Look to sell after a failed breakout above 1.1620 and return below this level

Look to buy after a failed move below 1.1598 and return above this level

GBP/USD

Look to sell after a failed breakout above 1.3334 and return below this level

Look to buy after a failed move below 1.3305 and return above this level

AUD/USD

Look to sell after a failed breakout above 0.6522 and return below this level

Look to buy after a failed move below 0.6491 and return above this level

USD/CAD

Look to sell after a failed breakout above 1.4032 and return below this level

Look to buy after a failed move below 1.3980 and return above this level