Despite the significant decline of the US dollar yesterday afternoon, traders managed to recover much of their positions today during Asian trading hours.

Positive news regarding the situation in the Middle East and US-Iran relations led to a resurgence in demand for risk assets. The observed improvement in the geopolitical situation has reduced the uncertainty that previously weighed on global markets. Traders, less concerned about the escalation of the conflict, began to invest more in risk assets. The weakening of the US dollar is a natural consequence of this shift.

Today, several key macroeconomic indicators are expected to be published in the European economy, which could significantly impact the euro's dynamics. In particular, market participants will closely monitor data on changes in Germany's unemployment rate, as declines in unemployment are traditionally a positive signal for the economy and may act as a catalyst for strengthening the euro.

Following the labor market data, particular attention will be given to the consumer price index releases for Germany and Italy. Moderate or elevated inflation, especially if it reaches or exceeds the European Central Bank's target, could heighten expectations for future monetary policy. If inflation figures exceed forecasts, this would strengthen the euro's position, as it may hint at tighter monetary policy by the ECB in the future.

As for the pound, the first half of the day in the financial markets also promises to be eventful. The main event will be the release of the UK GDP change figures for the first quarter. These figures will provide a comprehensive view of the state of the British economy, reflecting the dynamics of the manufacturing, services, and construction sectors. Positive data could provide a basis for strengthening the British pound, while disappointing figures could weaken the national currency.

Alongside the GDP release, significant interest will also be drawn to the current account of the balance of payments. This figure reflects the difference between money flowing into the country and money flowing out. A deviation of the balance from expected levels could significantly affect the pound's exchange rate, especially when assessing external trade and the country's investment appeal.

Additionally, the anticipated speech from Bank of England Financial Stability Committee member Sarah Breeden will add volatility to the markets. Her comments regarding inflation prospects, the state of the financial system, and potential future monetary policy may provide important signals for traders. Attention will be focused on any hints concerning changes in interest rates or other instruments the central bank may use to stabilize the economy or combat inflationary processes.

If the data aligns with economists' expectations, it would be better to act based on the Mean Reversion strategy. If the data is significantly higher or lower than economists' expectations, it is best to use the Momentum strategy.

Momentum Strategy (on Breakouts):

For the EUR/USD Pair:

• Buying on a breakout of 1.1408 could lead to an increase in the euro towards 1.1430 and 1.1459;
• Selling on a breakout of 1.1382 could lead to a decrease in the euro towards 1.1356 and 1.1327;

For the GBP/USD Pair:

• Buying on a breakout of 1.3255 could lead to an increase in the pound towards 1.3290 and 1.3320;
• Selling on a breakout of 1.3222 could lead to a decrease in the pound towards 1.3191 and 1.3170;

For the USD/JPY Pair:

• Buying on a breakout of 162.34 could lead to a rise in the dollar towards 162.64 and 162.92;
• Selling on a breakout of 162.08 could lead to a decline in the dollar towards 161.83 and 161.56;

Mean Reversion Strategy (on Reversals):

For the EUR/USD Pair:

• Look for short positions after a failed breakout above 1.1414 on a return below this level;
• Look for long positions after a failed breakout below 1.1379 on a return to this level;

For the GBP/USD Pair:

• Look for shorts after a failed breakout above 1.3250 on a return below this level;
• Look for longs after a failed breakout below 1.3222 on a return to this level;

For the AUD/USD Pair:

• Look for shorts after a failed breakout above 0.6886 on a return below this level;
• Look for longs after a failed breakout below 0.6865 on a return to this level;

For the USD/CAD Pair:

• Look for shorts after a failed breakout above 1.4240 on a return below this level;
• Look for longs after a failed breakout below 1.4220 on a return to this level;