The euro and the pound managed to hold their ground at the end of last week. Pressure on the U.S. dollar returned immediately after disappointing data, which once again strengthened expectations of a more dovish stance from the Federal Reserve.

Last Friday, U.S. retail sales data disappointed. This raises new questions about the strength of consumer demand, which until recently remained one of the key drivers of the American economy. The slowdown in retail sales growth may indicate several factors. First, although inflation is slowing, it remains at a reasonably high level, which puts pressure on household purchasing power. Second, high interest rates make loans more expensive, affecting spending on durable goods such as cars and household appliances. In the coming months, the key factor will be the dynamics of inflation and the actions of the Fed.

Today, only eurozone trade balance data is expected, so the chances of the euro continuing its upward trend look relatively good. However, it should not be overlooked that the currency market is a complex and multi-factor system, and a single favorable trade balance figure does not guarantee unconditional growth of the European currency. Several factors may influence EUR/USD dynamics. But given that no other reports are due today, the absence of a market reaction to these data may keep trading volatility relatively low.

There are also no reports from the United Kingdom, giving the British pound a chance to update its monthly high, near which it traded throughout last Friday. Thus, despite the favorable forecast for the eurozone trade balance, traders should remain cautious and take into account many other factors when making trading decisions on EUR/USD.

If the data matches economists' expectations, it is better to act based on the Mean Reversion strategy. If the data turns out to be much higher or lower than expected, the Momentum strategy would work best.

Momentum Strategy (Breakout):

EUR/USD

Buying on a breakout above 1.1729 may lead to growth toward 1.1780 and 1.1825.

Selling on a breakout below 1.1695 may lead to a decline toward 1.1666 and 1.1635.

GBP/USD

Buying on a breakout above 1.3587 may lead to growth toward 1.3615 and 1.3643.

Selling on a breakout below 1.3555 may lead to a decline toward 1.3520 and 1.3480.

USD/JPY

Buying on a breakout above 147.60 may lead to growth toward 147.90 and 148.20.

Selling on a breakout below 147.30 may lead to a decline toward 147.00 and 146.65.

Mean Reversion Strategy (Pullbacks):

EUR/USD

Selling will be considered after a failed breakout above 1.1723 and a return below this level.

Buying will be considered after a failed breakout below 1.1690 and a return to this level.

GBP/USD

Selling will be considered after a failed breakout above 1.3569 and a return below this level.

Buying will be considered after a failed breakout below 1.3544 and a return to this level.

AUD/USD

Selling will be considered after a failed breakout above 0.6533 and a return below this level.

Buying will be considered after a failed breakout below 0.6504 and a return to this level.

USD/CAD

Selling will be considered after a failed breakout above 1.3821 and a return below this level.

Buying will be considered after a failed breakout below 1.3795 and a return to this level.