The euro, pound, and other risk assets, including the Japanese yen, rose sharply against the U.S. dollar, and there were objective reasons for this.

A weak report on the growth rate of the U.S. economy in the first quarter of this year led to a sharp rise in the euro, pound, and yen and a drop in the dollar. Investors, concerned about signs of slowing economic momentum in the U.S., began actively selling off the dollar and shifting into what they perceived as more stable assets.

Several factors further fueled this process. First, the European Central Bank is showing a softer stance on inflation compared to the U.S. Federal Reserve, hinting at the possibility of further rate cuts to stimulate economic growth. Second, global geopolitical tensions also play a role. Uncertainty related to trade conflicts is pushing investors toward safe havens, and the euro, despite its own issues, is viewed as a safer option than the traditionally reserve-status dollar.

In the first half of today, we expect data on Germany's retail sales and the Consumer Price Index, as well as eurozone private sector lending volumes. These indicators will undoubtedly serve as a litmus test for assessing the current state of the European economy. Specifically, Germany's retail sales—the largest economy in the eurozone—are a key indicator of consumer demand. A decline could signal slowing economic growth and reduced consumer confidence, which could put pressure on the euro.

The Consumer Price Index (CPI) is another important indicator the ECB and traders closely watch. A rise in CPI could push the ECB to pause its rate-cutting cycle, typically strengthening the euro. Conversely, a low CPI could force the ECB to continue aggressively easing policy.

Finally, the volume of eurozone private sector lending allows an assessment of how actively banks lend to businesses and households. An increase in lending usually indicates healthy economic growth and business optimism, positively impacting the euro. A decline could signal economic problems and increased caution among lenders, pressuring the currency.

If the data matches economists' expectations, acting based on the Mean Reversion strategy is better. If the data significantly exceeds or falls short of expectations, it's best to use the Momentum strategy.

Momentum Strategy (Breakout):

EUR/USD

Buying on a breakout above 1.1365 could lead to growth toward 1.1396 and 1.1426;

Selling on a breakout below 1.1336 could lead to a fall toward 1.1296 and 1.1256;

GBP/USD

Buying on a breakout above 1.3490 could lead to growth toward 1.3525 and 1.3555;

Selling on a breakout below 1.3460 could lead to a fall toward 1.3416 and 1.3382;

USD/JPY

Buying on a breakout above 144.20 could lead to growth toward 144.61 and 144.96;

Selling on a breakout below 143.74 could lead to a decline toward 143.25 and 142.79;

Mean Reversion Strategy (Pullbacks):

EUR/USD

Look for sells after an unsuccessful breakout above 1.1384 upon a return below this level;

Look for buys after an unsuccessful breakout below 1.1325 upon a return to this level;

GBP/USD

Look for sells after an unsuccessful breakout above 1.3504 upon a return below this level;

Look for buys after an unsuccessful breakout below 1.3460 upon a return to this level;

AUD/USD

Look for sells after an unsuccessful breakout above 0.6450 upon a return below this level;

Look for buys after an unsuccessful breakout below 0.6420 upon a return to this level;

USD/CAD

Look for sells after an unsuccessful breakout above 1.3831 upon a return below this level;

Look for buys after an unsuccessful breakout below 1.3805 upon a return to this level.