The US dollar collapsed after traders concluded that the Federal Reserve had no choice but to cut interest rates in September of this year. Weak job growth in the US nonfarm sector for August was direct evidence of this.

Traders revised their expectations for the timing of Fed policy easing after the US Department of Labor report showed that only 22,000 new jobs were created in August, significantly below expert forecasts. This news immediately affected currency markets. The US Dollar Index, which tracks the greenback against a basket of major currencies, fell sharply. Market participants viewed the weak employment data as a sign that US economic growth is slowing, which could lead to a new wave of stimulus measures.

Today, we expect figures for changes in German industrial production and the trade balance. These macroeconomic indicators will serve as important signals for assessing the health of the eurozone's largest economy and its contribution to the broader European picture. A decline in industrial production may point to slowing growth, supply chain issues, or reduced demand for German products, which in turn could put pressure on the euro. Meanwhile, a positive trade balance—especially if it beats forecasts—could support the euro by demonstrating the competitiveness of German goods on the world market.

Shortly after, the Sentix Investor Confidence Index for the eurozone will be published. This leading indicator, reflecting the sentiment of institutional and private investors, plays a key role in forecasting future economic activity. An increase in the index signals growing optimism among investors regarding the eurozone's economic prospects, which typically leads to the euro strengthening.

For the UK, there will be no important fundamental data today, so focus will be on technical levels.

If the data matches economists' expectations, it's better to act using a Mean Reversion strategy. If the data is much better or worse than expected, a Momentum strategy works best.

Momentum Strategy (Breakout):

EUR/USD

• Buying on a breakout above 1.1730 could push the euro up to the 1.1771 and 1.1815 areas
• Selling on a breakout below 1.1705 could lead to declines towards 1.1668 and 1.1635

GBP/USD

• Buying on a breakout above 1.3515 could lead to pound gains toward 1.3540 and 1.3590
• Selling on a breakout below 1.3484 could drive the pound down to 1.3450 and 1.3416

USD/JPY

• Buying on a breakout above 148.15 could take the dollar up toward 148.44 and 148.85
• Selling on a breakout below 148.00 could lead to dollar declines to 147.70 and 147.40

Mean Reversion Strategy (Pullbacks):

EUR/USD

• Look to sell after a failed breakout above 1.1730 and a reversion below this level
• Look to buy after a failed breakout below 1.1699 and a reversion back above this level

GBP/USD

• Look to sell after a failed breakout above 1.3511 and a reversion below
• Look to buy after a failed breakout below 1.3475 and a reversion back above

AUD/USD

• Look to sell after a failed breakout above 0.6572 and a reversion below
• Look to buy after a failed breakout below 0.6550 and a reversion back above

USD/CAD

• Look to sell after a failed breakout above 1.3845 and a reversion below
• Look to buy after a failed breakout below 1.3818 and a reversion back above