The euro and the pound continued to move lower after strong U.S. economic data, which revived expectations that the Federal Reserve will maintain a more restrictive policy.

The sharp 0.9% increase in U.S. producer prices led to an equally sharp rise in the U.S. dollar against a range of risk assets. Traders interpreted this data as a signal that the Fed may take a more aggressive approach in its rate policy to combat inflation. However, the influence of a single macroeconomic indicator is rarely decisive. In addition to inflation and interest rates, exchange rates are affected by geopolitical risks, the labor market, and even political stability in the country. On the other hand, the European economy is facing its own challenges, and given the weak economic growth in the second quarter, the European Central Bank has no choice but to continue adhering to a softer monetary policy.

Today, there is no important fundamental data for the eurozone. For this reason, the focus will shift to the meeting of the EU Council of Finance Ministers. At this meeting, issues of energy security, inflation, and economic growth prospects in the eurozone are likely to be discussed. Any statements or decisions made during this meeting could impact the euro's exchange rate. Traders will pay particular attention to signals indicating the readiness of EU governments to take further joint actions to overcome the current crisis. Disagreements among member states over fiscal policy or inflation-control strategies could exert negative pressure on the euro.

Momentum Strategy (Breakout):

EUR/USD

Buying on a breakout above 1.1666 could lead to a rise in the euro towards 1.1698 and 1.1729.

Selling on a breakout below 1.1645 could lead to a decline in the euro towards 1.1625 and 1.1600.

GBP/USD

Buying on a breakout above 1.3554 could lead to a rise in the pound towards 1.3587 and 1.3615.

Selling on a breakout below 1.3520 could lead to a decline in the pound towards 1.3480 and 1.3440.

USD/JPY

Buying on a breakout above 147.35 could lead to a rise in the dollar towards 147.60 and 147.90.

Selling on a breakout below 147.00 could lead to a decline in the dollar towards 146.65 and 146.30.

Mean Reversion Strategy (Pullbacks):

EUR/USD

I will look for selling opportunities after an unsuccessful breakout above 1.1672 followed by a return below this level.

I will look for buying opportunities after an unsuccessful breakout below 1.1641 followed by a return above this level.

GBP/USD

I will look for selling opportunities after an unsuccessful breakout above 1.3559 followed by a return below this level.

I will look for buying opportunities after an unsuccessful breakout below 1.3521 followed by a return above this level.

AUD/USD

I will look for selling opportunities after an unsuccessful breakout above 0.6519 followed by a return below this level.

I will look for buying opportunities after an unsuccessful breakout below 0.6490 followed by a return above this level.

USD/CAD

I will look for selling opportunities after an unsuccessful breakout above 1.3820 followed by a return below this level.

I will look for buying opportunities after an unsuccessful breakout below 1.3795 followed by a return above this level.