The recent strengthening of the U.S. dollar, following remarks from Federal Reserve representatives, has led to a surge in euro selling, causing the EUR/USD pair to reach new lows. Comments from FOMC member Christopher Waller, which stated that there is no need to rush into rate cuts, allowed sellers to keep control of the market. However, not all risk assets experienced a sell-off.

Concerns about economic growth in the eurozone and escalating geopolitical tensions have put additional pressure on the euro, making EUR/USD the most affected pair during Asian trading.

Key upcoming data releases include the ZEW Economic Sentiment Index for Germany, the ZEW Current Conditions Index for Germany, and the ZEW Economic Sentiment Index for the Eurozone. Only strong results from these reports can help restore demand for the euro; otherwise, the downward pressure on it is likely to increase. Additionally, the EU finance ministers' meeting is not expected to provide significant support for the euro, indicating that further downward correction is probable.

The British pound may have difficulty holding onto its gains, as UK labor market data is set to be released today, and economists' forecasts are not very optimistic. Expectations include an increase in jobless claims and a rise in the unemployment rate to 4.5%.

Such data could pressure the Bank of England, forcing it to maintain a cautious monetary policy stance. Given the current inflationary environment and the BoE's focus on curbing inflation, rising unemployment presents a challenging dilemma. Keeping interest rates unchanged to combat inflation could further weaken the labor market, while rate cuts might stimulate the economy but risk losing control over inflation. Negative labor market data could weaken the pound against other currencies, particularly the U.S. dollar, as investors reassess their outlook on the UK economy and adjust their positions accordingly.

If the data aligns with economists' expectations, the mean reversion strategy would be best. If the data significantly exceeds or falls below forecasts, the Momentum strategy would be more effective.

Momentum Strategy (on breakout):

EUR/USD

Buying on a break above 1.0470 could lead to a rise toward 1.0512 and 1.0554.

Selling on a break below 1.0450 could push the euro down to 1.0414 and 1.0376.

GBP/USD

Buying on a break above 1.2627 could lead to a rise toward 1.2664 and 1.2692.

Selling on a break below 1.2580 could push the pound down to 1.2550 and 1.2515.

USD/JPY

Buying on a break above 152.10 could push the dollar higher toward 152.42 and 152.82.

Selling on a break below 151.73 could trigger a sell-off toward 151.35 and 151.05.

Mean Reversion Strategy (Trading on Pullbacks):

EUR/USD

I will look for sell opportunities after an unsuccessful breakout above 1.0483, followed by a return below this level.

I will look for buy opportunities after an unsuccessful breakout below 1.0447, followed by a return above this level.

GBP/USD

I will look for sell opportunities after an unsuccessful breakout above 1.2616, followed by a return below this level.

I will look for buy opportunities after an unsuccessful breakout below 1.2587, followed by a return above this level.

AUD/USD

I will look for sell opportunities after an unsuccessful breakout above 0.6367, followed by a return below this level.

I will look for buy opportunities after an unsuccessful breakout below 0.6333, followed by a return above this level.

USD/CAD

I will look for sell opportunities after an unsuccessful breakout above 1.4213, followed by a return below this level.

I will look for buy opportunities after an unsuccessful breakout below 1.4183, followed by a return above this level.