During the day, the US dollar ceded ground to the euro, the pound, and other risk assets at the end of last week. However, this did not lead to a major shift in the balance of power in the market.

A sharp drop in the University of Michigan Consumer Sentiment Index weakened the US dollar. The index, which tracks consumer expectations regarding the economy, fell to 55 points. This raised concerns about a potential decrease in consumer spending in the future, putting pressure on the dollar. Lower consumer confidence also heightened fears of a possible slowdown in US economic growth. Consumer spending is a key driver of the American economy, and its decline could negatively impact GDP.

Today, the only notable data expected are the eurozone trade balance figures and the Bundesbank's monthly report. Later in the evening, ECB President Christine Lagarde will speak, but she is unlikely to touch on monetary policy topics.

Typically, the Bundesbank's monthly report provides an in-depth analysis of the current state of the German economy, which is the engine of the entire eurozone. Traders will scrutinize comments on inflation, economic growth prospects, and the impact of external factors such as geopolitical tensions and supply chain disruptions. Special attention will be paid to the section on the state of the industrial sector and its outlook during the trade crisis, as this can give an idea of the future for the broader economy.

Lagarde's speech will also attract attention. Investors are eager to hear clear signals from the ECB chief about future monetary policy, although, in my opinion, everything necessary was already said last week, so we're unlikely to hear anything new.

If the data matches economists' expectations, it's best to act based on a Mean Reversion strategy. If the data comes in much higher or lower than anticipated, the best option is a Momentum strategy.

Momentum Strategy (Breakout):

EUR/USD

• Buying a breakout above 1.1745 could lead to euro gains toward 1.1778 and 1.1813
• Selling on a break below 1.1710 could send the euro down to 1.1690 and 1.1660

GBP/USD

• Buying a breakout above 1.3575 could push the pound toward 1.3600 and 1.3620
• Selling on a break below 1.3555 could send the pound down to 1.3525 and 1.3495

USD/JPY

• Buying a breakout above 147.55 could drive the dollar up to 147.84 and 148.13
• Selling on a break below 147.30 could trigger a sell-off of the dollar to 146.95 and 146.60

Mean Reversion Strategy (Pullbacks):

EUR/USD

• Look to sell after an unsuccessful breakout above 1.1744 if the price returns below this level
• Look to buy after an unsuccessful breakout below 1.1719 if the price returns above this level

GBP/USD

• Look to sell after an unsuccessful breakout above 1.3575 if the price falls back below this level
• Look to buy after an unsuccessful breakout below 1.3542 if the price climbs back above this level

AUD/USD

• Look to sell after an unsuccessful breakout above 0.6674 if the price returns below this level
• Look to buy after an unsuccessful breakout below 0.6642 if the price returns above this level

USD/CAD

• Look to sell after an unsuccessful breakout above 1.3850 if the price falls back below this level
• Look to buy after an unsuccessful breakout below 1.3827 if the price climbs back above this level