The U.S. dollar declined sharply against the euro, while the pound and Japanese yen fared worse, as pressure on risk appetite remained and the dollar did not lose much value there.

As the report indicated, U.S. inflation came in below economists' forecasts, leading to a weakening of the dollar's position, but this effect was not uniform across all currencies. The Consumer Price Index in the United States, a key inflation indicator, increased by only 0.3% last month, while a growth of 0.4% was expected, prompting markets to revise their expectations regarding the future policy of the Federal Reserve. This news triggered an immediate response in the currency markets. The dollar weakened noticeably. Investors who feared a more dovish Fed stance on interest rates in response to inflation are now inclined to think the central bank may be more decisive in its policy.

Today, financial markets are anticipating the release of key German data, specifically the Ifo business climate indicator. This comprehensive metric is traditionally regarded as a barometer of the economic health of Europe's largest economy and encompasses three major components: the current situation assessment, economic expectations, and the business climate index.

In addition to the Ifo data, reports on private sector credit volume and changes in the M3 money supply aggregate will also be published today. These indicators will help assess the dynamics of credit activity and money supply in the region, which, in turn, may significantly impact inflation and economic growth. An increase in private-sector credit typically signals rising investment and consumer spending, while an increase in the M3 aggregate may foreshadow inflation.

Regarding the pound, today is expected to be relatively quiet in financial markets, as the economic calendar features only the release of retail sales data from the Confederation of British Industry (CBI). In this context, the prospects for a notable strengthening of the British pound appear quite limited. While CBI data serves as an important indicator of consumer demand and the overall state of retail in the UK, it typically exerts less influence on the currency market than, for example, inflation reports, employment data, or the Bank of England's interest rate decisions.

If the data aligns with economists' expectations, it would be best to adopt a Mean Reversion strategy. If the figures come in significantly above or below economists' forecasts, employing a Momentum strategy would be ideal.

Momentum Strategy (Breakout Trading)

For EUR/USD

• Buy on breakout above 1.1640, with targets at 1.1675 and 1.1695
• Sell on a breakout below 1.1620, with targets at 1.1575 and 1.1545

For GBP/USD

• Buy on breakout above 1.3335, with targets at 1.3350 and 1.3375
• Sell on a breakout below 1.3310, with targets at 1.3280 and 1.3260

For USD/JPY

• Buy on breakout above 153.10, with targets at 153.45 and 153.84
• Sell on a breakout below 152.85, with targets at 152.60 and 152.10

Mean Reversion Strategy (Return Trading)

For EUR/USD

• Look to sell after a failed breakout above 1.1652, on a return below this level
• Look to buy after a failed breakdown below 1.1610, on a return above this level

For GBP/USD

• Look to sell after a failed breakout above 1.3338, on a return below this level
• Look to buy after a failed breakdown below 1.3305, on a return above this level

For AUD/USD

• Look to sell after a failed breakout above 0.6546, on a return below this level
• Look to buy after a failed breakdown below 0.6528, on a return above this level

For USD/CAD

• Look to sell after a failed breakout above 1.3996, on a return below this level
• Look to buy after a failed breakdown below 1.3974, on a return above this level