The euro, the pound, and other risk assets have easily recovered their morning losses caused by another bout of nervousness in the Middle East. However, by midday, the situation seemed to take a softer turn: Iran stopped adamantly rejecting new negotiations, and the US took a more cautious stance in its statements regarding the Middle East.

Today, the first half of the day is expected to be quite eventful, with economic data that could influence market sentiment.

Key indicators reflecting the state of business activity in the Eurozone, and in particular in the locomotive of the European economy—Germany—will be in focus. The release of the Eurozone business sentiment index from the reputable ZEW Institute is expected. This is a leading indicator, as it reflects business expectations for future economic trends. An increase in the index typically signals rising optimism and a willingness among entrepreneurs to invest and expand production, while its decline may indicate growing concerns and potential slowdowns.

Simultaneously, similar data will be released for Germany. The ZEW business sentiment index for Germany, as well as the current situation index, will provide a more detailed understanding of the current state of affairs in Europe's largest economy.

As for the pound, today's morning session will be very important. Two fundamental macroeconomic indicators will be the focus of experts: the employment rate and changes in average wages. The unemployment rate is traditionally considered the main indicator of economic activity. Its decline usually signals a thriving labor market, increased demand for skilled professionals, and, consequently, higher consumer spending.

Reports on changes in average wages are also particularly important. A wage increase exceeding the expected inflation rate could confirm concerns about the sustainability of price growth. The Bank of England is currently analyzing trends in average wage levels very carefully, as these levels directly affect the purchasing power of the population and, therefore, consumer activity. If income growth outpaces inflation, it could serve as a strong argument for a stricter monetary policy aimed at curbing inflationary risks.

If the data matches economists' expectations, it is advisable to act based on the Mean Reversion strategy. If the data turn out to be significantly above or below economists' expectations, it is best to use the Momentum strategy.

Momentum Strategy (Breakout):

For the EUR/USD Pair:

• Buy on a breakout of level 1.1791, which could lead to an increase of the euro to around 1.1822 and 1.1848;
• Sell on a breakout of level 1.1762, which could lead to a decline of the euro to around 1.1730 and 1.1707;

For the GBP/USD Pair:

• Buy on a breakout of level 1.3540, which could lead to an increase of the pound to around 1.3567 and 1.3596;
• Sell on a breakout of level 1.3506, which could lead to a decline of the pound to around 1.3477 and 1.3450;

For the USD/JPY Pair:

• Buy on a breakout of level 159.13, which could lead to an increase of the dollar to around 159.36 and 159.60;
• Sell on a breakout of level 158.87, which could lead to a decline of the dollar to around 158.57 and 158.28;

Mean Reversion Strategy (Return):

For the EUR/USD Pair:

• Look to sell after a failed breakout above 1.1789 on a return below this level;
• Look to buy after a failed breakout below 1.1770 on a return to this level;

For the GBP/USD Pair:

• Look to sell after a failed breakout above 1.3532 on a return below this level;
• Look to buy after a failed breakout below 1.3507 on a return to this level;

For the AUD/USD Pair:

• Look to sell after a failed breakout above 0.7186 on a return below this level;
• Look to buy after a failed breakout below 0.7162 on a return to this level;

For the USD/CAD Pair:

• Look to sell after a failed breakout above 1.3654 on a return below this level;
• Look to buy after a failed breakout below 1.3637 on a return to this level;