The euro, the pound, and other risk assets continued to decline against the U.S. dollar as the situation in the Middle East did not improve.

Strong data on manufacturing and services activity in the US for April also supported the U.S. dollar. The PMI indices published by S&P Global showed robust growth, exceeding economists' expectations and indicating the ongoing resilience of the U.S. economy despite events in the Middle East.

The manufacturing sector, in particular, showed promising results, with the PMI index reaching a multi-month high. This indicates that businesses are increasing production volumes, and new orders continue to come in. The services sector also returned above the 50-point mark. These positive economic signals have strengthened the U.S. dollar's position in global currency markets.

Today's economic calendar is busy, with special attention in the first half of the day on German data, which could significantly influence European market sentiment. The key event will be the publication of the new IFO Business Climate Index report. This composite indicator, comprising assessments of the current situation and economic expectations, is one of the key barometers of the largest economy in the eurozone. The results of these surveys will provide valuable insights into how business leaders assess current conditions for their activities amid a challenging geopolitical situation.

As for the pound, traders will also be paying close attention to the UK. In the first half of the day, the focus will be on the release of retail sales data. Unfortunately, economists' forecasts do not inspire optimism. Weak figures are expected, which may indicate a slowdown in consumer spending. Amid rising inflation and uncertainty about future economic prospects, the British are likely to cut back on spending, prioritizing essential goods. Weak retail data will certainly exert negative pressure on the British pound.

If the data aligns with economists' expectations, it is better to act based on the Mean Reversion strategy. If the data show significantly higher or lower results than economists' expectations, the Momentum strategy may be the best approach.

Momentum Strategy (for Breakouts):

For the EUR/USD Pair:

• Buying at a breakout above 1.1691 may lead to an increase in the euro toward 1.1714 and 1.1736;
• Selling at a breakout below 1.1666 may lead to a decline in the euro toward 1.1645 and 1.1619;

For the GBP/USD Pair:

• Buying at a breakout above 1.3475 may lead to an increase in the pound toward 1.3515 and 1.3551;
• Selling at a breakout below 1.3445 may lead to a decline in the pound toward 1.3416 and 1.3381;

For the USD/JPY Pair:

• Buying at a breakout above 159.85 may lead to an increase in the dollar toward 160.05 and 160.25;
• Selling at a breakout below 159.60 may lead to a decline in the dollar toward 159.35 and 159.15;

Mean Reversion Strategy (for Pullbacks):

For the EUR/USD Pair:

• Look to sell after a failed breakout above 1.1695 on a return below this level;
• Look to buy after a failed breakout below 1.1671 on a return to this level;

For the GBP/USD Pair:

• Look to sell after a failed breakout above 1.3477 on a return below this level;
• Look to buy after a failed breakout below 1.3449 on a return to this level;

For the AUD/USD Pair:

• Look to sell after a failed breakout above 0.7142 on a return below this level;
• Look to buy after a failed breakout below 0.7115 on a return to this level;

For the USD/CAD Pair:

• Look to sell after a failed breakout above 1.3720 on a return below this level;
• Look to buy after a failed breakout below 1.3690 on a return to this level;