The end of last week saw the U.S. dollar gain ground, particularly as risk assets experienced profit-taking, helping the dollar recover somewhat.

Likely, traders buying the dollar were also relying on a strong U.S. business activity report, as the American business sector is experiencing its best quarter in four years. The composite PMI soared to 56.0 from 54.5, marking a 52-month high, while the services index jumped to 56.8, a peak not seen in 20 months. PMI indices are based on company surveys and reflect the state of business activity; a value above 50 indicates growth. Thus, such a sharp rise confirmed the strength of the economy and added support to the dollar. According to S&P Global, this data suggests GDP growth of around 3.0% annually in the third quarter. However, the picture was not completely uniform, as the industrial sector stalled, and the manufacturing activity index fell to 53.2 points.

For the euro and pound, the strengthening dollar put pressure on both currencies, and by the end of the week both had lost ground; however, these developments leave some room for doubt regarding the sustainability of the trend.

Today, no Eurozone data are expected in the first half of the day, depriving the euro of its own drivers. Without internal data, the euro tends to move in line with external factors, specifically the dynamics of the dollar and overall risk appetite, as these factors define the direction of the pair in the absence of incentives. Typically, the setup is influenced by reports on inflation, GDP, or business activity, but today there are no such benchmarks in the calendar. Under these conditions, the EUR/USD pair is likely to remain within a sideways channel, while still keeping alive the chances for further upward movement. As long as the dollar does not show pronounced strength, the euro has the opportunity to maintain its upward momentum and continue to climb.

Today's lack of UK data in the first half of the day also leaves the pound without its own drivers. Without fresh figures on inflation, employment, or business activity, traders will have no reasons to reassess their positions. With a calm backdrop, buyers will have every chance, if not to continue the GBP/USD rise, at least to maintain 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 preferred.

Momentum Strategy (Breakout):

For the EURUSD Pair

Buying on a breakout above 1.1691 may lead to an increase in the euro to the 1.1709 and 1.1727 areas;

Selling on a breakout below 1.1670 may lead to a drop in the euro to the 1.1646 and 1.1623 areas;

For the GBPUSD Pair

Buying on a breakout above 1.3652 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 drop in the pound to the 1.3594 and 1.3569 areas;

For the USDJPY Pair

Buying on a breakout above 159.13 may lead to an increase in the dollar to the 159.39 and 159.60 areas;

Selling on a breakout below 158.83 may lead to a decline in the dollar to the 158.57 and 158.28 areas;

Mean Reversion Strategy (Return):

For the EURUSD Pair

I will look for short positions after a failed breakout above 1.1690 on a return below this level;

I will look for long positions after a failed breakout below 1.1669 on a return to this level;

For the GBPUSD Pair

I will look for shorts after a failed breakout above 1.3657 on a return below this level;

I will look for longs after a failed breakout below 1.3627 on a return to this level;

For the AUDUSD Pair

I will look for shorts after a failed breakout above 0.7183 on a return below this level;

I will look for longs after a failed breakout below 0.7157 on a return to this level;

For the USDCAD Pair

I will look for shorts after a failed breakout above 1.3825 on a return below this level;

I will look for longs after a failed breakout below 1.3781 on a return to this level;