Pressure on risk assets persisted following Wednesday's trading session, intensifying after the Federal Reserve's interest rate decision. The U.S. President's ambiguous statements regarding the Middle East also increased demand for the dollar, as traders remain uncertain whether the United States genuinely intends to intervene in the conflict or is only creating a diversion.

Yesterday, the Federal Open Market Committee (FOMC) unanimously voted to keep the federal funds rate unchanged at 4.5%. While the decision was expected after a two-day meeting, it nonetheless reinforced market confidence in the Fed's consistent monetary policy. In its accompanying statement, the FOMC emphasized that although inflation is becoming less of a concern, a cautious approach to monetary policy is warranted—particularly in light of recent events. The Committee also acknowledged a slowdown in economic growth and worsening labor market conditions, admitting that recession risks remain.

Maintaining the current rate allows the Fed to assess the impact of previous rate cuts and more carefully monitor the evolving economic landscape.

Upcoming Events and ECB/BoE Focus:

Today, there are no significant macroeconomic data releases scheduled from the eurozone. The key events planned are a speech by Bundesbank President Joachim Nagel and a Eurogroup meeting. Nagel's address will likely focus on the current economic conditions in Germany and the eurozone overall. Investors will closely watch for signals about the European Central Bank's future rate policy, particularly inflationary pressures, and growth prospects following recent geopolitical developments.

The Bank of England's rate decision and the accompanying Monetary Policy Report are far more significant. The consensus forecast is that the BoE will keep rates unchanged, which could trigger a short-term rebound in the British pound against the U.S. dollar. Traders are eagerly awaiting the BoE's verdict. Keeping the interest rate unchanged may provide some relief for the pound, which is currently under pressure from the strong dollar. Such stability could temporarily support the pound, providing some breathing room for market participants. A more hawkish tone in the BoE report could push the pound higher. Conversely, if the Bank voices concerns about slowing economic growth and expresses satisfaction with the current level of inflation, the pound may quickly lose ground.

Trading Strategy Suggestions:

The Mean Reversion strategy is preferred if the actual data match economists' forecasts. The Momentum strategy is more appropriate if the data significantly deviates from expectations.

Momentum Strategy (Breakout):

EUR/USD

Buying on a breakout above 1.1480 may lead to a rise in the euro towards 1.1530 and 1.1580.

Selling on a breakout below 1.1455 may lead to a drop in the euro towards 1.1408 and 1.1377.

GBP/USD

Buying on a breakout above 1.3424 may lead to a rise in the pound towards 1.3444 and 1.3472.

Selling on a breakout below 1.3388 may lead to a drop in the pound towards 1.3363 and 1.3335.

USD/JPY

Buying on a breakout above 145.28 may lead to a rise in the dollar towards 145.63 and 145.92.

Selling on a breakout below 144.91 may lead to dollar sell-offs towards 144.08 and 143.66.

Mean Reversion Strategy (Pullbacks):

EUR/USD

I will look for sell opportunities after a failed breakout above 1.1493, upon return below this level.

I will look for buy opportunities after a failed breakout below 1.1440, upon return above this level.

GBP/USD

I will look for sell opportunities after a failed breakout above 1.3423, upon return below this level.

I will look for buy opportunities after a failed breakout below 1.3378, upon return above this level.

AUD/USD

I will look for sell opportunities after a failed breakout above 0.6518, upon return below this level.

I will look for buy opportunities after a failed breakout below 0.6470, upon return above this level.

USD/CAD

I will look for sell opportunities after a failed breakout above 1.3727, upon return below this level.

I will look for buy opportunities after a failed breakout below 1.3686, upon return above this level.