The euro regained its position against the dollar following news of a trade agreement with the U.S., while the pound continued to decline.

Yesterday, it was reported that the United States and the European Union had reached a trade agreement. According to the deal, the EU bloc will face tariffs of 15% on most of its exports. This decision has undoubtedly sparked concern and outrage in European capitals; however, 15% is still better than the 30% that was set to take effect this Friday. Although European officials expressed their disappointment and concern, key leaders agreed to the proposal. The consequences of this agreement could be significant for various sectors of the European economy. Car manufacturers, agricultural producers, and consumer goods sectors are particularly vulnerable. The increase in tariffs will raise the cost of these goods for American consumers, which in turn may reduce demand and the volume of exports from Europe. The deal supported the euro, as investors and traders viewed it as the best-case scenario under current circumstances.

Unfortunately, there are no economic reports scheduled for the eurozone today, so the bullish momentum observed in the EUR/USD pair is likely to persist. However, the absence of macroeconomic data doesn't mean the market lacks direction. Investors and traders will likely focus on analyzing the EU–U.S. trade agreement, although no details have been released yet. It's also important not to overlook technical analysis—price charts, support, and resistance levels can offer valuable clues about the next moves in EUR/USD. In the absence of strong fundamental drivers, technical patterns may become especially relevant for short-term speculation.

Regarding the pound, we expect the Confederation of British Industry (CBI) to release retail sales figures today. The market is eagerly anticipating this data, which may serve as an indicator of the state of the British economy. If the figures are disappointing, it will undoubtedly spark concerns about consumer demand and overall economic activity in the UK. In this scenario, the British pound is likely to continue weakening against the U.S. dollar. Moreover, weak retail data could prompt the Bank of England to reconsider its monetary policy in a more dovish direction, which would increase pressure on the pound.

If the data matches economists' expectations, it's best to trade using a Mean Reversion strategy. If the data comes in much better or worse than expected, a Momentum strategy is more appropriate.

Momentum Strategy (Breakout):

EUR/USD

Buying on a breakout above 1.1760 may lead to a rise toward 1.1790 and 1.1825

Selling on a breakout below 1.1735 may lead to a decline toward 1.1714 and 1.1680

GBP/USD

Buying on a breakout above 1.3435 may lead to a rise toward 1.3475 and 1.3520

Selling on a breakout below 1.3417 may lead to a fall toward 1.3390 and 1.3365

USD/JPY

Buying on a breakout above 147.93 may lead to a rise toward 148.23 and 148.46

Selling on a breakout below 147.59 may lead to a decline toward 147.32 and 146.89

Mean Reversion Strategy (Pullbacks):

EUR/USD

Look for selling opportunities after a failed breakout above 1.1773, upon return below that level

Look for buying opportunities after a failed breakout below 1.1739, upon return to that level

GBP/USD

Look for selling opportunities after a failed breakout above 1.3455, upon return below that level

Look for buying opportunities after a failed breakout below 1.3425, upon return to that level

AUD/USD

Look for selling opportunities after a failed breakout above 0.6589, upon return below that level

Look for buying opportunities after a failed breakout below 0.6561, upon return to that level

USD/CAD

Look for selling opportunities after a failed breakout above 1.3708, upon return below that level

Look for buying opportunities after a failed breakout below 1.3686, upon return to that level