The euro and the pound faced a major sell-off immediately after the release of U.S. data, but a broad decline in risk assets has not materialized.

The sharp drop in the U.S. unemployment rate to 4.1% and the increase in nonfarm payrolls above economists' forecasts prompted buying of the U.S. dollar and selling of risk assets. However, this optimism is not without certain risks. Firstly, the sustainability of the current labor market trend is questionable, especially after the recent ADP report and signs of slowing economic growth. Secondly, while U.S. inflation has yet to show significant acceleration, the Federal Reserve is in no hurry to lower interest rates. Nevertheless, the positive employment data creates a favorable short-term backdrop for the U.S. dollar.

Today, European markets are expected to be marked by significant statistical releases, which could noticeably shift trader sentiment and help shape short-term trends. The focus will be on key indicators of industrial and consumer activity from leading eurozone economies. Germany and France will be the first to report industrial order volumes, which reflect demand for industrial goods and serve as a crucial barometer of economic health. A rise in orders suggests business optimism and production expansion, whereas a decline may indicate slowing growth.

Next, Italy's retail sales data will be released. This indicator, which reflects consumer activity, is a key driver of overall economic growth. The morning session will culminate with the release of the eurozone Producer Price Index (PPI) report — a leading indicator of inflation that shows changes in prices for goods produced by industrial enterprises. An increase in the PPI may signal potential future growth in consumer prices.

As for the pound sterling, this morning's spotlight in UK financial markets will be the release of the PMI for the construction sector. This indicator reflects the level of business activity in the construction sector, a significant contributor to the UK's GDP. A reading above 50 points signals expansion, while a drop below this level indicates contraction.

In parallel, market participants will closely follow remarks by Bank of England Monetary Policy Committee member Martin Taylor. Analysts closely scrutinize statements from MPC members, as they can provide insights into future decisions regarding interest rates and monetary policy.

If the data meets economists' expectations, it's best to follow a Mean Reversion strategy. If the data turns out significantly above or below expectations, a Momentum strategy is preferable.

Momentum Strategy (Breakout):

EUR/USD

Buying on a breakout above 1.1787 may lead to euro rising towards 1.1825 and 1.1866

Selling on a breakout below 1.1765 may lead to euro falling towards 1.1740 and 1.1710

GBP/USD

Buying on a breakout above 1.3675 may lead to pound rising towards 1.3710 and 1.3745

Selling on a breakout below 1.3650 may lead to pound falling towards 1.3630 and 1.3600

USD/JPY

Buying on a breakout above 144.50 may lead to dollar rising towards 144.85 and 145.30

Selling on a breakout below 144.20 may lead to dollar falling towards 143.66 and 143.25

Mean Reversion Strategy (Pullbacks):

EUR/USD

I will look for selling opportunities after a failed breakout above 1.1786 and a return below this level

I will look for buying opportunities after a failed breakout below 1.1756 and a return to this level

GBP/USD

I will look for selling opportunities after a failed breakout above 1.3677 and a return below this level

I will look for buying opportunities after a failed breakout below 1.3637 and a return to this level

AUD/USD

I will look for selling opportunities after a failed breakout above 0.6585 and a return below this level

I will look for buying opportunities after a failed breakout below 0.6563 and a return to this level

USD/CAD

I will look for selling opportunities after a failed breakout above 1.3585 and a return below this level

I will look for buying opportunities after a failed breakout below 1.3564 and a return to this level