Demand for the US dollar increased only in the second half of the day, leading to another sell-off of risk assets. Neither Christine Lagarde's remarks nor those of Philip Lane at the European Central Bank helped the euro find solid ground.

The sharp acceleration in inflationary pressures, reflected in the April data for the US Producer Price Index (PPI), was the main driver of the dollar's rise yesterday. Traders, concerned about the prospect of further price rallies, rushed to revise their expectations regarding the Federal Reserve's future policy. Strong inflation signals increased the likelihood that the Fed may need to maintain high interest rates longer than previously anticipated or even consider raising them in response to further deterioration in the inflation outlook.

Today, European data is limited to Spain's Consumer Price Index (CPI) figures, which are unlikely to significantly alter the euro's decline. Analysts will be closely monitoring this indicator, hoping to find any hints of potential easing of inflationary pressure. However, incoming information suggests that price pressures continue unabated. It's important to remember that the current situation for the euro is influenced not only by inflation figures but also by geopolitical factors. Therefore, expecting a significant reversal based solely on one report of Spain's consumer prices would be premature.

As for the pound, the first half of the day is set to be rich in important UK macroeconomic data that could significantly impact the national currency's exchange rate. Analysts and investors will focus on the figures for GDP growth for March and the first quarter of this year. These figures will provide the most comprehensive insight into the health of the British economy, its growth rates, and the potential for a slowdown. In addition to GDP, data on changes in industrial production will also be published. This indicator reflects the state of the manufacturing sector, which plays a significant role in the country's economy.

Attention will also be paid to the trade balance for goods. This measure reflects the ratio of exports to imports, and a negative value may pressure the currency, indicating that the country is buying more than it is selling.

If the data aligns with economists' expectations, it is better to act using the Mean Reversion strategy. If the data is significantly above or below economists' expectations, it is best to use the Momentum strategy.

Momentum Strategy (Breakout):

For the EUR/USD Pair:

• Long positions on a breakout above the level of 1.1720 may lead to a rise in the euro to around 1.1750 and 1.1770.
• Short positions on a breakout below the level of 1.1700 may lead to a decline in the euro to around 1.1675 and 1.1654.

For the GBP/USD Pair:

• Longs on a breakout above the level of 1.3530 may lead to a rise in the pound to around 1.3555 and 1.3585.
• Shorts on a breakout below the level of 1.3505 may lead to a decline in the pound to around 1.3480 and 1.3455.

For the USD/JPY Pair:

• Longs on a breakout above the level of 157.95 may lead to a rise in the dollar to around 158.39 and 157.79.
• Shorts on a breakout below the level of 157.65 may lead to a sell-off of the dollar to around 157.20 and 156.96.

Mean Reversion Strategy (Return):

For the EUR/USD Pair:

• I will look for shorts after a failed breakout above 1.1725 when returning below this level.
• I will look for longs after a failed breakout below 1.1700 when returning to this level.

For the GBP/USD Pair:

• I will look for shorts after a failed breakout above 1.3536 when returning below this level.
• I will look for longs after a failed breakout below 1.3504 when returning to this level.

For the AUD/USD Pair:

• I will look for shorts after a failed breakout above 0.7269 when returning below this level.
• I will look for longs after a failed breakout below 0.7242 when returning to this level.

For the USD/CAD Pair:

• I will look for shorts after a failed breakout above 1.3715 when returning below this level.
• I will look for longs after a failed breakout below 1.3694 when returning to this level.