The euro and the pound continued to fall against the U.S. dollar despite weak U.S. housing market data.

Yesterday's reports on housing starts and building permits turned out to be somewhat mixed, which is usually seen as a negative signal for the economy. However, traders appear to have focused on other factors supporting the dollar. One such factor is the uncertainty regarding the Federal Reserve's monetary easing. Persistent inflation is pushing the Fed to keep interest rates high, making the dollar more attractive for investors. In addition, geopolitical tensions in Europe are also weighing on the euro.

Today, in the first half of the day, data on the eurozone Consumer Price Index, Germany's Producer Price Index, and a speech by European Central Bank President Christine Lagarde are expected. These events will undoubtedly affect currency market dynamics, especially the euro. The eurozone Consumer Price Index will serve as a key indicator of inflationary pressure. If the data show that inflation remains high, this may prompt the ECB to pause its rate-cutting cycle, which in turn would support the euro. Conversely, if inflation begins to slow, the euro may come under pressure.

Germany's Producer Price Index will provide insight into prices for industrial goods and raw materials. A rise in this index could indicate potential inflationary pressures in the future, which may also influence ECB decisions.

ECB President Christine Lagarde's speech will be an important signal for the market. Traders will closely monitor her comments regarding the current economic situation, inflation prospects, and the ECB's next steps.

As for the pound, it has already risen on news that UK inflation came in higher than economists' forecasts. The Consumer Price Index exceeded expectations, triggering a wave of buying in the pound sterling, as market participants interpreted this as a signal that the Bank of England will have to be more cautious in cutting interest rates. Naturally, this prospect made the pound more attractive for traders seeking higher yields. Higher interest rates usually attract foreign capital, increasing demand for the currency.

If the data match economists' expectations, it is better to act based on a Mean Reversion strategy. If the data turn out to be much higher or lower than expected, a Momentum strategy is preferable.

Momentum Strategy (Breakout):

EUR/USD

Buying on a breakout above 1.1655 may lead to growth toward 1.1670 and 1.1695.

Selling on a breakout below 1.1625 may lead to a decline toward 1.1600 and 1.1567.

GBP/USD

Buying on a breakout above 1.3510 may lead to growth toward 1.3555 and 1.3587.

Selling on a breakout below 1.3475 may lead to a decline toward 1.3440 and 1.3400.

USD/JPY

Buying on a breakout above 147.60 may lead to growth toward 147.90 and 148.20.

Selling on a breakout below 147.30 may lead to a decline toward 147.00 and 146.65.

Mean Reversion Strategy (Pullbacks):

EUR/USD

I will look for selling opportunities after a failed breakout above 1.1656 with a return below this level.

I will look for buying opportunities after a failed breakout below 1.1613 with a return above this level.

GBP/USD

I will look for selling opportunities after a failed breakout above 1.3505 with a return below this level.

I will look for buying opportunities after a failed breakout below 1.3459 with a return above this level.

AUD/USD

I will look for selling opportunities after a failed breakout above 0.6460 with a return below this level.

I will look for buying opportunities after a failed breakout below 0.6430 with a return above this level.

USD/CAD

I will look for selling opportunities after a failed breakout above 1.3886 with a return below this level.

I will look for buying opportunities after a failed breakout below 1.3857 with a return above this level.