The euro and the pound have not been able to recover following a significant decline during yesterday's European trading session. The lack of U.S. economic data has limited the pressure on these currency pairs, but prospects for renewed buying appear pessimistic.

The recent victory of the opposition in Germany was initially seen as a potential catalyst for reforms and economic development. However, weak IFO data has raised concerns about the stability of the German economy, which is considered the driving force of Europe's economic growth. As noted earlier, the absence of U.S. data has further increased uncertainty, complicating the assessment of the world's largest economy and its influence on global markets.

Attention is now turning to the upcoming economic data from both Europe and the U.S., as well as the actions of the European Central Bank and the Federal Reserve. Today, Germany's GDP figures will be released—a crucial indicator of economic health. Traditionally, the German economy has demonstrated stable growth due to its strong industrial base and export-oriented model. However, in recent years, this indicator has struggled due to weak industrial activity. Internal factors such as the investment climate, inflation, and government policy play a significant role as well.

The new government's proposed stimulus measures aimed at supporting small and medium-sized businesses, along with investments in infrastructure and innovation, could contribute to GDP growth in the future. For now, though, it is best to remain cautious in expectations.

For the pound, today's focus will be on retail sales data from the Confederation of British Industry and a speech by Bank of England MPC member Huw Pill. Based on the latest UK inflation data, any hawkish hints from Pill could trigger a short-term rally in the pound. Traders will closely monitor signals regarding future monetary policy, as even subtle changes in tone could be interpreted as precursors to upcoming decisions. Otherwise, consolidation within the current range is likely to continue.

If the data aligns with economists' expectations, a Mean Reversion strategy is advisable. Conversely, if the data significantly surpasses or falls short of expectations, a Momentum strategy is more suitable.

Momentum Strategy (on breakout):

EUR/USD

Buying on a breakout above 1.0485 could lead to a rise toward 1.0525 and 1.0560.

Selling on a breakout below 1.0450 could push the euro down to 1.0430 and 1.0400.

GBP/USD

Buying on a breakout above 1.2645 could drive the pound up to 1.2680 and 1.2720.

Selling on a breakout below 1.2620 could lead to a decline toward 1.2600 and 1.2560.

USD/JPY

Buying on a breakout above 149.70 could send the dollar higher to 150.18 and 150.50.

Selling on a breakout below 149.60 could trigger a decline toward 149.30 and 148.95.

Mean Reversion Strategy (on pullbacks):

EUR/USD

I will look for selling opportunities after an unsuccessful breakout above 1.0483, once the price returns below this level.

I will look for buying opportunities after an unsuccessful breakout below 1.0451, once the price returns above this level.

GBP/USD

I will look for selling opportunities after an unsuccessful breakout above 1.2642, once the price returns below this level.

I will look for buying opportunities after an unsuccessful breakout below 1.2604, once the price returns above this level.

AUD/USD

I will look for selling opportunities after an unsuccessful breakout above 0.6365, once the price returns below this level.

I will look for buying opportunities after an unsuccessful breakout below 0.6332, once the price returns above this level.

USD/CAD

I will look for selling opportunities after an unsuccessful breakout above 1.4291, once the price returns below this level.

I will look for buying opportunities after an unsuccessful breakout below 1.4231, once the price returns above this level.