The American dollar continues to be in demand in the currency market, though this more closely resembles a lack of interest in buying risk assets rather than a real change in market dynamics.

Yesterday, the dollar increased slightly, despite Scott Bessent declaring a true "economic D-Day" against Iran. The package included sanctions against more than 60 organizations. At the same time, Trump personally called world leaders, demanding they sever ties with Iran, which initially seemed to promise serious escalation and a surge in demand for the safe-haven dollar. However, the market quickly detected a lack of real substance behind the loud announcement. China, which purchases the majority of Iranian oil, was not named directly, and when asked about cutting off Chinese banks, Bessent gave a vague response, referring to quiet diplomacy. When questioned about why sanctions were not being imposed immediately, he stated that he did not intend to blow up the global financial system. For this reason, the market reaction was muted. The absence of strong dollar movements provided a breather for the euro and the pound, as the threat without immediate measures did not trigger a flight to safe-haven assets.

Today, in the first half of the day, the euro will face a busy schedule of German data, including GDP data for the second quarter and the Ifo business climate index, which assesses the conditions of the business environment, current situation, and economic expectations. GDP reflects the pace of economic growth and serves as a foundation for assessing its health. At the same time, the Ifo indices are based on company surveys and show their sentiments regarding the current situation and prospects. The market will monitor whether the improvement in sentiment can be confirmed, considering that the expectations component of Ifo had already increased. At the same time, the assessment of the current situation remained weak.

As for the pound, there are again no data scheduled for the UK in the first half of the day, so it is dependent on external factors. Without fresh data, traders will have no reason to reassess their positions, and the dominant sentiment will remain centered on the dollar. In a calm backdrop, buyers will have every chance, if not to continue the growth of GBP/USD, at least to retain their advantage.

If the data aligns with economists' expectations, it is best to act based on the Mean Reversion strategy. If the data is significantly higher or lower than economists' expectations, the Momentum strategy is more suitable.

Momentum Strategy (Breakout):

For the EUR/USD Pair

Buying on a breakout above 1.1670 may lead to an increase in the euro to the 1.1686 and 1.1709 areas;

Selling on a breakout below 1.1646 may lead to a decline in the euro to the 1.1623 and 1.1601 areas;

For the GBP/USD Pair

Buying on a breakout above 1.3647 may lead to an increase in the pound to the 1.3672 and 1.3707 areas;

Selling on a breakout below 1.3620 may lead to a decline in the pound to the 1.3594 and 1.3569 areas;

For the USD/JPY Pair

Buying on a breakout above 159.39 may lead to an increase in the dollar to the 159.60 and 159.83 areas;

Selling on a breakout below 159.13 may lead to a decline in the dollar to the 158.83 and 158.57 areas;

Mean Reversion Strategy (Return):

For the EUR/USD Pair

I will look for short positions after a failed breakout above 1.1670 on a return below that level;

I will look for long positions after a failed breakout below 1.1649 on a return to that level;

For the GBP/USD Pair

I will look for shorts after a failed breakout above 1.3645 on a return below that level;

I will look for longs after a failed breakout below 1.3615 on a return to that level;

For the AUD/USD Pair

I will look for shorts after a failed breakout above 0.7163 on a return below that level;

I will look for longs after a failed breakout below 0.7138 on a return to that level;

For the USD/CAD Pair

I will look for shorts after a failed breakout above 1.3872 on a return below that level;

I will look for longs after a failed breakout below 1.3839 on a return to that level;