The euro, pound, and other risk assets continued to decline against the U.S. dollar after Iran, ignoring all warnings from the US, continued to intercept trading vessels in the Strait of Hormuz.

Iran's actions in the Strait of Hormuz, including the shelling of commercial ships and the seizure of at least two vessels, elicited a predictable response in the currency market. In conditions of heightened geopolitical tension, there is traditionally a rise in demand for the U.S. dollar as a safe haven, which has occurred in this case. The dollar's strengthening reflects traders' desire to protect their assets from risks associated with regional escalation.

Further movement in the EUR/USD pair will be closely monitored by market participants, as it is directly influenced by the publication of key macroeconomic indicators from the eurozone. Particularly significant are the data on the manufacturing and services PMI (Purchasing Managers' Index), as well as the composite PMI, which integrates readings from both sectors. These indices are among the most timely indicators of economic conditions, reflecting purchasing managers' sentiment about current conditions and prospects. Strong data—though unlikely given the situation in the Middle East and the new energy crisis—could signal more sustainable recovery or growth in the eurozone economy, which, in turn, would raise the likelihood of appreciation for the euro. Conversely, weak PMI figures indicating a slowdown in business activity or even a decline could increase pressure on the euro.

As for the pound, it is expected to face equivalent data, but for the UK. If the PMI indices show strong growth, indicating improved business conditions, this could strengthen the British pound. On the other hand, if the published data comes in worse than expected or shows signs of deceleration, this could raise concerns regarding the outlook for the British economy, further increasing pressure on the GBP/USD pair.

If the data aligns with economists' expectations, it would be advisable to implement the Mean Reversion strategy. If the data significantly exceeds or falls short of economists' expectations, a Momentum strategy may be the best approach.

Momentum Strategy (for Breakouts):

For the EUR/USD Pair:

• Buying at a breakout above 1.1723 may lead to an increase in the euro toward 1.1760 and 1.1790;
• Selling at a breakout below 1.1695 may result in a decline in the euro toward 1.1670 and 1.1650;

For the GBP/USD Pair:

• Buying at a breakout above 1.3495 may lead to an increase in the pound toward 1.3525 and 1.3551;
• Selling at a breakout below 1.3476 may result in a decline in the pound toward 1.3446 and 1.3416;

For the USD/JPY Pair:

• Buying at a breakout above 159.60 may lead to an increase in the dollar toward 159.83 and 160.02;
• Selling at a breakout below 159.40 may result in a decline in the dollar toward 159.15 and 158.78;

Mean Reversion Strategy (for Pullbacks):

For the EUR/USD Pair:

• Look to sell after a failed breakout above 1.1720 on a return below this level;
• Look to buy after a failed breakout below 1.1688 on a return to this level;

For the GBP/USD Pair:

• Look to sell after a failed breakout above 1.3511 on a return below this level;
• Look to buy after a failed breakout below 1.3475 on a return to this level;

For the AUD/USD Pair:

• Look to sell after a failed breakout above 0.7165 on a return below this level;
• Look to buy after a failed breakout below 0.7135 on a return to this level;

For the USD/CAD Pair:

• Look to sell after a failed breakout above 1.3679 on a return below this level;
• Look to buy after a failed breakout below 1.3659 on a return to this level;