The euro and the pound continue to rise against the US dollar. Discussions about the need for further rate cuts in the US are putting pressure on the dollar, while Germany's new fiscal policy initiatives support risk assets.

Lower interest rates in the US, although weakening the dollar, can stimulate economic growth, supporting risk assets. However, uncertainty regarding the scale and timing of rate cuts creates market nervousness. At the same time, Germany's fiscal stimulus measures to support the economy positively impact investor sentiment. Increased government spending could boost GDP growth and job creation, making German assets more attractive.

Despite strong US ISM services sector activity data, the dollar remained under pressure against the euro. The euro, in turn, strengthened due to expectations regarding the European Central Bank's future monetary policy. Investors believe that the ECB will continue cutting interest rates to stimulate economic growth, which, given the current complex geopolitical situation, is working in favor of the euro rather than against it.

In addition to the interest rate decision, the ECB's updated economic forecasts will be closely monitored. Traders will carefully analyze the regulator's expectations for inflation and economic growth in the eurozone in the coming years. Any hints of downward revisions in the forecasts could strengthen expectations for further monetary policy easing.

Christine Lagarde's presentation of the interest rate decision and economic forecasts at the press conference will be particularly important. Her tone and rhetoric could significantly influence market sentiment. Any signals regarding the future trajectory of ECB policy could trigger market volatility and strengthen the euro.

If the data aligns with economists' expectations, following a Mean Reversion strategy is best. A Momentum strategy is recommended if the data is significantly higher or lower than expected.

Momentum Strategy (on breakout):

EUR/USD

Buying on a breakout above 1.0820 could push the euro towards 1.0855 and 1.0885.

Selling on a breakout below 1.0790 could lead to a decline towards 1.0750 and 1.0715.

GBP/USD

Buying on a breakout above 1.2920 could push the pound towards 1.2945 and 1.2980.

Selling on a breakout below 1.2885 could lead to a decline towards 1.2850 and 1.2808.

USD/JPY

Buying on a breakout above 149.00 could push the dollar towards 149.50 and 150.00.

Selling on a breakout below 148.80 could trigger a selloff towards 148.30 and 147.90.

Mean Reversion Strategy (on pullbacks):

EUR/USD

Look for selling opportunities after an unsuccessful breakout above 1.0825, followed by a return below this level.

Look for buying opportunities after an unsuccessful breakout below 1.0771, followed by a return above this level.

GBP/USD

Look for selling opportunities after an unsuccessful breakout above 1.2910, followed by a return below this level.

Look for buying opportunities after an unsuccessful breakout below 1.2876, followed by a return above this level.

AUD/USD

Look for selling opportunities after an unsuccessful breakout above 0.6360, followed by a return below this level.

Look for buying opportunities after an unsuccessful breakout below 0.6327, followed by a return above this level.

USD/CAD

Look for selling opportunities after an unsuccessful breakout above 1.4362, followed by a return below this level.

Look for buying opportunities after an unsuccessful breakout below 1.4299, followed by a return above this level.