Despite the US dollar's active decline yesterday afternoon, traders continue to buy dollars at every favorable opportunity, although bulls for both the euro and the pound are not giving up either.

Yesterday, the dollar strengthened on news that US consumer confidence rose in June, as falling gasoline prices offset concerns about the labor market. The report indicated that the Conference Board's confidence index increased by 0.6 points to 91.2 after a downward revision from the previous month.

This moderate increase indicates that Americans remain optimistic about their personal financial situations and the economy as a whole. The decrease in fuel prices, a key component of consumer spending, significantly affects inflation perceptions and, consequently, spending willingness.

Today promises to be a busy economic day, which could significantly affect the further movement of both the euro and the British pound. First, attention will turn to a block of important data from Europe that could alter current market sentiment.

We start with data on the Purchasing Managers' Index (PMI) for Germany's manufacturing sector. It is expected that this indicator will continue its downward trend, reflecting a slowdown in growth for the largest economy in the Eurozone. Following that, similar data for the Eurozone as a whole will be published and are also likely to show a deterioration in industrial conditions. These releases could heighten concerns about recession and put pressure on the euro.

However, the key event of the day will be the speech by European Central Bank President Christine Lagarde. All eyes will be on her statements regarding future monetary policy. Special attention will be given to any hints about potential rate hikes. If Lagarde supports raising rates amid slowing economic activity, this could lead to an appreciation of the euro.

The publication of the Eurozone consumer price index is also anticipated. Inflation data is one of the key benchmarks for the ECB when making rate decisions. A moderate slowdown in inflation could provide grounds for a more dovish tone from the central bank, while persistent inflation would push toward a tighter policy.

As for the pound, today's economic calendar is also busy. The first half of the day will be marked by the release of PMI data for the manufacturing sector. This indicator is a leading one, reflecting activity in one of the most important sectors of the British economy. It is expected to provide a clear picture of the current state of the manufacturing sector, its growth or slowdown, which, in turn, could influence overall economic growth forecasts.

Simultaneously, Nationwide's house price index data will be released. This indicator is one of the most closely monitored indicators of the UK housing market's state. Weak data will confirm the emerging trend indicating weakness in the housing market.

Another significant event will be the speech by Bank of England Governor Andrew Bailey. His remarks may shed light on the central bank's current assessment of the economic situation, inflation risks, and future monetary policy prospects.

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

Momentum Strategy (on Breakouts):

For the EUR/USD Pair

• Buying on a breakout of 1.1410 could lead to an increase in the euro towards 1.1430 and 1.1459;
• Selling on a breakout of 1.1382 could lead to a decline in the euro towards 1.1356 and 1.1327;

For the GBP/USD Pair

• Buying on a breakout of 1.3245 could lead to an increase in the pound towards 1.3270 and 1.3300;
• Selling on a breakout of 1.3235 could lead to a decline in the pound towards 1.3191 and 1.3170;

For the USD/JPY Pair

• Buying on a breakout of 162.90 could lead to a rise in the dollar towards 163.18 and 163.48;
• Selling on a breakout of 162.64 could lead to a decline in the dollar towards 162.34 and 162.08;

Mean Reversion Strategy (on Retracements):

For the EUR/USD Pair

• Look for short positions after a failed breakout above 1.1420 on a return below this level;
• Look for long positions after a failed breakout below 1.1394 on a return to this level;

For the GBP/USD Pair

• Look for shorts after a failed breakout above 1.3250 on a return below this level;
• Look for longs after a failed breakout below 1.3218 on a return to this level;

For the AUD/USD Pair

• Look for shorts after a failed breakout above 0.6909 on a return below this level;
• Look for longs after a failed breakout below 0.6881 on a return to this level;

For the USD/CAD Pair

• Look for shorts after a failed breakout above 1.4225 on a return below this level;
• Look for longs after a failed breakout below 1.4200 on a return to this level;