The euro and the Japanese yen retain all chances for further growth against the US dollar, while the British pound faces diminishing buying pressure amid concerns about the potential for a dovish policy from the Bank of England.

The euro and pound continued to rise against the dollar yesterday following remarks from Federal Reserve member Christopher Waller, who said the central bank is on the right track in stimulating the economy. Traders interpreted these words as a signal for a more accommodative monetary policy in the future, which weakened the dollar's position. The market also reacted positively to Eurozone economic data, which came in somewhat better than expected.

Today, a significant amount of important reports from the Eurozone is anticipated. It will start with data on the business activity index in the services sector of the Eurozone, the PMI for the manufacturing sector, and the composite PMI index, and will conclude with the ZEW economic sentiment index for the Eurozone and Germany. Traders and analysts will pay close attention to these figures, as they can provide key insights into the current state of the region's economy and its near-term prospects.

The PMI for the manufacturing sector, in particular, is an important indicator of manufacturing activity and usually precedes broader economic trends. A reading above 50 indicates growth, while a reading below 50 signals contraction. On the other hand, the ZEW Economic Sentiment Index reflects analysts' and investors' expectations regarding future economic conditions. It can provide insights into how optimistic or pessimistic market participants are. A significant improvement in this index could indicate a recovery of confidence, which would support the euro.

Regarding the pound, in addition to similar PMI data, attention will shift to figures for the UK unemployment rate and changes in average earnings. Traders will be highly attentive to these reports, as they could significantly affect forecasts of the BoE's future monetary policy. Strong employment data and rising wages could prompt the central bank to take more aggressive actions, thereby strengthening the British pound. Conversely, weak labor market indicators could raise concerns about the UK economy's prospects and subsequently weaken the pound's position.

If the data aligns with economists' expectations, it is advisable to act on the Mean Reversion strategy. If the numbers are significantly above or below economists' forecasts, the Momentum strategy would be most effective.

Momentum Strategy (Breakout):

For the EUR/USD Pair:

• Long positions on a breakout of 1.1768 could lead to a rise in the euro to around 1.1793 and 1.1817;
• Short positions on a breakout of 1.1740 could lead to a decrease in the euro to around 1.1711 and 1.1684;

For the GBP/USD Pair:

• Longs on a breakout of 1.3378 could lead to a rise in the pound to around 1.3400 and 1.3434;
• Shorts on a breakout of 1.3350 could lead to a decrease in the pound to around 1.3320 and 1.3287;

For the USD/JPY Pair:

• Longs on a breakout of 155.00 could lead to a rise in the dollar to around 155.32 and 155.75;
• Shorts on a breakout of 154.70 could result in a sell-off for the dollar to around 154.35 and 154.00;

Mean Reversion Strategy (Return):

For the EUR/USD Pair:

• Look for shorts after a failed breakout above 1.1763 on a return below this level;
• Look for longs after a failed breakout below 1.1746 on a return to this level;

For the GBP/USD Pair:

• Look for shorts after a failed breakout above 1.3384 on a return below this level;
• Look for longs after a failed breakout below 1.3353 on a return to this level;

For the AUD/USD Pair:

• Look for shorts after a failed breakout above 0.6649 on a return below this level;
• Look for longs after a failed breakout below 0.6621 on a return to this level;

For the USD/CAD Pair:

• Look for shorts after a failed breakout above 1.3781 on a return below this level;
• Look for longs after a failed breakout below 1.3759 on a return to this level;