The dollar continued to lose ground yesterday. It appears that developments in the Middle East and the upcoming central bank meetings are seriously affecting the willingness to continue purchasing the dollar and safe assets.

Yesterday's statements from Trump that the war with Iran would end in the coming days only bolstered demand for riskier assets, although such phrases have been heard quite frequently lately. On one hand, this helps reduce geopolitical tension, which normally has a positive effect on investor sentiment. On the other hand, such statements have been made many times before, while bombings in the Middle East continue unabated.

Today, during the first half of the day, global financial markets will focus on the publication of important macroeconomic data from the Eurozone. Specifically, updated data on the Consumer Price Index (CPI) and core prices for February of this year are expected. These indicators are crucial for assessing inflationary processes in the region and, accordingly, for shaping expectations of the European Central Bank (ECB) regarding further monetary policy. The CPI data allows for assessing the overall inflation level, while the core inflation indicator, which excludes the most volatile components such as energy prices and food, provides a more accurate view of current pricing trends that the ECB pays special attention to when setting interest rates.

However, it should be noted that the February data will not fully reflect current price levels, as the US and Israel's war with Iran, which began in March, has significantly impacted energy prices worldwide.

Regarding the pound, the lack of fresh UK data will hinder its further strengthening. The deficit of macroeconomic information from the United Kingdom creates uncertainty among market participants relying on fundamental analysis, especially ahead of the Bank of England's meeting. Without new reports on inflation, employment, or GDP, the currency's dynamics will largely be determined by technical factors and speculative sentiment.

If the data aligns with economists' expectations, it would be advisable to act based on the Mean Reversion strategy. If the data is significantly above or below economists' expectations, the Momentum strategy would be the best approach.

Momentum Strategy (for Breakout):

For the EUR/USD Pair:

• Long positions on a breakout at the level of 1.1555 may lead to an increase of the euro to the area of 1.1575 and 1.1609;
• Short positions on a breakout at the level of 1.1530 may lead to a drop of the euro to the area of 1.1487 and 1.1448;

For the GBP/USD Pair:

• Longs on a breakout at the level of 1.3371 may lead to a rise of the pound to the area of 1.3406 and 1.3440;
• Shorts on a breakout at the level of 1.3355 may lead to a drop of the pound to the area of 1.3335 and 1.3306;

For the USD/JPY Pair:

• Longs on a breakout at the level of 158.80 may lead to a rise of the dollar to the area of 159.18 and 159.47;
• Shorts on a breakout at the level of 158.60 may lead to a decline of the dollar to the area of 158.28 and 157.93;

Mean Reversion Strategy (for Rebound):

For the EUR/USD Pair:

• Shorts will be sought after a failed breakout above 1.1551 on a return below this level;
• Longs will be sought after a failed breakout below 1.1528 on a return to this level;

For the GBP/USD Pair:

• Shorts will be sought after a failed breakout above 1.3374 on a return below this level;
• Longs will be sought after a failed breakout below 1.3344 on a return to this level;

For the AUD/USD Pair:

• Shorts will be sought after a failed breakout above 0.7129 on a return below this level;
• Longs will be sought after a failed breakout below 0.7100 on a return to this level;

For the USD/CAD Pair:

• Shorts will be sought after a failed breakout above 1.3710 on a return below this level;
• Longs will be sought after a failed breakout below 1.3683 on a return to this level;