The US dollar has actively regained some of the positions it lost at the beginning of the week.

This indicates that traders are taking a wait-and-see approach ahead of important fundamental data. It is clear that the market is influenced by a range of factors that could, in the long term, exert significant pressure on the US currency. Chief among these is the ongoing debate about the future monetary policy of the Federal Reserve. Despite inflation showing signs of rising, the Fed is set to lower interest rates at the upcoming meeting in September of this year. Much will depend on today's US inflation data, which we will discuss in more detail later on.

During the European session, focus should be on the data concerning Italy's industrial production. These figures will set the tone for the upcoming trade in the European currency market. Against the backdrop of sluggish economic activity in the eurozone, any hints of a revival in Italian industry could provide a breath of fresh air for the euro, supporting its weakened position against the US dollar. Weak numbers, on the contrary, will heighten fears of recession in the region, undermine investor confidence in the European currency, and provoke its decline.

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

Momentum Strategy (Breakout):

EUR/USD

Buying on a breakout of 1.1728 could lead to euro growth toward 1.1760 and 1.1813

Selling on a breakout of 1.1695 could lead to a euro decline toward 1.1668 and 1.1630

GBP/USD

Buying on a breakout of 1.3553 could take the pound toward 1.3587 and 1.3615

Selling on a breakout of 1.3520 could lead to a pound decline toward 1.3484 and 1.3451

USD/JPY

Buying on a breakout of 147.50 could take the dollar toward 147.84 and 148.13

Selling on a breakout of 147.25 could lead to dollar sales toward 146.90 and 146.60

Mean Reversion Strategy (Pullbacks):

EUR/USD

I'll look for sells after a failed breakout above 1.1725 and a return below this level

I'll look for buys after a failed breakout below 1.1686 and a return above this level

GBP/USD

I'll look for sells after a failed breakout above 1.3549 and a return below this level

I'll look for buys after a failed breakout below 1.3508 and a return above this level

AUD/USD

I'll look for sells after a failed breakout above 0.6626 and a return below this level

I'll look for buys after a failed breakout below 0.6574 and a return above this level

USD/CAD

I'll look for sells after a failed breakout above 1.3865 and a return below this level

I'll look for buys after a failed breakout below 1.3828 and a return above this level