The dollar has once again found itself in a difficult position due to Donald Trump's latest statements regarding the Middle East.

The euro and the pound reacted positively to news that negotiations with Iran are progressing well, with the key problematic issue being disagreements over the nuclear program. Traders welcomed signals indicating a potential decrease in geopolitical tension in the region, which typically supports risk assets. However, despite the optimism, the ongoing disagreements over the Iranian nuclear program and the situation in the Strait of Hormuz prevent any claims of a complete resolution. This means that increased volatility in the currency market is likely to persist, and further movements of the euro, the pound, and other risk assets will depend on the development of negotiations and other factors affecting the global economy.

Regarding reports, key economic indicators for the Eurozone are expected to be released today. In the first half of the day, data on the Eurozone manufacturing purchasing managers' index (PMI) for May will be published. This indicator is one of the most important barometers of the economy, reflecting production, employment, and business expectations in the industry. Alongside the manufacturing sector, special attention will be paid to the PMI for the services sector. Since the services sector accounts for a significant share of the Eurozone's GDP, its dynamics are critical for assessing the region's overall economic health. Given that activity in this sector has been declining in recent months, the euro may face new challenges.

In addition to the PMI indices, the publication of data on the European Central Bank's balance of payments current account is also on the agenda. This information provides insight into a country or region's trade balance, capital flows, and other financial operations, which can shed light on the Eurozone's external economic positions and potential impact on the exchange rate.

As for the pound, the situation there could also change dramatically, as important data similar to those in the Eurozone are forthcoming. Traders will closely monitor the release of key PMI activity indices in the UK, which will serve as indicators of the state of the British economy at the beginning of the second quarter.

First and foremost, attention will be on the publication of the manufacturing sector's PMI data. This indicator, which reflects the state of this crucial sector of the economy, will provide insight into how well the industry is coping with current challenges, including potential consequences of the war in the Middle East. Equally important will be the release of the PMI for the services sector. Given the significant share of services in the UK's GDP, the dynamics of this indicator are vital for shaping the overall picture of economic activity. Growth or stagnation in this sector could have a substantial impact on the evaluation of the British economy's prospects and the British pound.

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

Momentum Strategy (on Breakout):

For the EUR/USD Pair

Long positions on a breakout of level 1.1635 may lead to a rise in the euro to the area of 1.1659 and 1.1678;

Short positions on a breakout of level 1.1609 may lead to a drop in the euro to the area of 1.1585 and 1.1555;

For the GBP/USD Pair

Longs on a breakout of level 1.3444 may lead to a rise in the pound to the area of 1.3473 and 1.3505;

Shorts on a breakout of level 1.3410 may lead to a drop in the pound to the area of 1.3379 and 1.3344;

For the USD/JPY Pair

Longs on a breakout of level 159.15 may lead to a rise in the dollar to the area of 159.40 and 159.65;

Shorts on a breakout of level 158.85 may lead to a sell-off of the dollar to the area of 158.55 and 158.25;

Mean Reversion Strategy (on Return):

For the EUR/USD Pair

Shorts will be sought after a failed breakout beyond 1.1638 on a return below this level;

Longs will be sought after a failed breakout beyond 1.1610 on a return to this level;

For the GBP/USD Pair

Shorts will be sought after a failed breakout beyond 1.3448 on a return below this level;

Longs will be sought after a failed breakout beyond 1.3414 on a return to this level;

For the AUD/USD Pair

Shorts will be sought after a failed breakout beyond 0.7145 on a return below this level;

Longs will be sought after a failed breakout beyond 0.7095 on a return to this level;

For the USD/CAD Pair

Shorts will be sought after a failed breakout beyond 1.3775 on a return below this level;

Longs will be sought after a failed breakout beyond 1.3748 on a return to this level;