The euro and British pound quickly recovered from losses incurred in the first half of the day; however, a bullish market has yet to develop, and there are objective reasons for this.

The dollar lost ground following dovish statements from Federal Reserve officials on future interest rates. Traders reacted to hints of further monetary policy easing. However, such a reaction could be premature. Today, several important decisions are expected that could overturn the current market picture.

A European Central Bank decision regarding the main interest rate is anticipated, as is a similar decision from the Bank of England.

Attention will be closely focused on Christine Lagarde's press conference as ECB President. Traders and analysts will be looking for hints about future easing measures amid slowing eurozone inflation. Any signals indicating a readiness for further stimulus could apply pressure on the euro. However, Lagarde is likely to maintain a cautious tone, emphasizing the need to assess incoming data while keeping options open for future action. She will likely avoid making concrete commitments to avoid constraining the ECB's future flexibility. New economic forecasts from the ECB will also be scrutinized.

Regarding the pound, the BoE's decision on the key interest rate may weigh on the currency. Most analysts are confident that the rate will be lowered to 3.75%. However, the most significant interest lies in the accompanying statement regarding monetary policy, as well as the subsequent comments from the BoE's Governor, Andrew Bailey. Markets will closely analyze every word to catch hints about the central bank's future actions. Traders are particularly interested in how quickly the BoE intends to continue easing monetary policy moving forward. It should be noted that this year, the regulator has followed a plan of quarterly rate cuts. If the BoE refrains from providing clear indications regarding future policy, volatility in financial markets could substantially increase.

If the data aligns with economists' expectations, it is advisable to rely on the Mean Reversion strategy. Conversely, if the data is significantly above or below economists' expectations, the Momentum strategy will be most appropriate.

Momentum Strategy (Breakout):

For the EUR/USD pair:

• Buy on a breakout above 1.1754, which could lead to the euro rising to around 1.1776 and 1.1817.
• Sell on a breakout below 1.1729, which could result in a decline to around 1.1706 and 1.1684.

For the GBP/USD pair:

• Buy on a breakout above 1.3380, which could lead to a rise in the pound to around 1.3421 and 1.3452.
• Sell on a breakout below 1.3360, which could result in a decline to around 1.3340 and 1.3322.

For the USD/JPY pair:

• Buy on a breakout above 156.00, which could lead to the dollar rising to around 156.45 and 156.89.
• Sell on a breakout below 155.67, which could lead to a decline in the dollar to around 155.32 and 155.01.

Mean Reversion Strategy (Pullback):

For the EUR/USD pair:

• Look for selling opportunities after a failed breakout above 1.1753 on a return below this level.
• Look for buying opportunities after a failed breakout below 1.1733 on a return to this level.

For the GBP/USD pair:

• Look for selling opportunities after a failed breakout above 1.3383 on a return below this level.
• Look for buying opportunities after a failed breakout below 1.3356 on a return to this level.

For the AUD/USD pair:

• Look for selling opportunities after a failed breakout above 0.6614 on a return below this level.
• Look for buying opportunities after a failed breakout below 0.6596 on a return to this level.

For the USD/CAD pair:

• Look for selling opportunities after a failed breakout above 1.3790 on a return below this level.
• Look for buying opportunities after a failed breakout below 1.3771 on a return to this level.