Demand for the US dollar remained strong at the end of last week, as the situation in the Middle East has not improved.

Geopolitical tensions in the Middle East continue to significantly impact global financial markets, primarily affecting the US dollar. The growing uncertainty and new risks of escalation in the conflict typically stimulate demand for the dollar as a "safe haven," as traders seek to minimize risk by moving capital into reliable assets. Any direct military confrontations between the US and Iran, as increasingly warned by Trump, could introduce new turmoil in the markets. In such a scenario, the US currency is expected to further strengthen against other major currencies, including the euro.

Today, the first half of the day will be relatively calm in terms of macroeconomic events. The key event will be the release of Italy's trade balance data, which is unlikely to cause significant market changes. This indicator can provide insights into the current state of the Italian economy and its export and import operations.

Simultaneously, investor and analyst attention will be focused on the G7 leaders' meeting. While the specific outcomes of such meetings are rarely predictable, these events often serve as a platform to discuss key global challenges, including economic policy, trade relations, and geopolitical issues. Statements made by participants at the G7 or agreements reached may influence market sentiment and outline future trends.

Regarding the pound, the first half of the day appears relatively calm, with UK macroeconomic data. The lack of significant fundamental data means market attention will shift to other factors, including statements from Bank of England officials. Particular interest will be directed toward the speeches of Monetary Policy Committee members Kathryn L. Mann and Megan Greene. As key decision-makers regarding interest rates and the country's monetary policy, their words may contain important signals regarding future steps of the central bank—especially against the backdrop of rising inflation in the country. Regardless of whether the speeches are formal or contain more detailed assessments, they could still influence the British pound.

If the data aligns with economists' expectations, it would be wise to rely on the Mean Reversion strategy. If the data significantly deviates from economists' expectations, the Momentum strategy would be the best approach.

Momentum Strategy (Breakout):

For the EUR/USD pair:

• Long positions on a breakout of the level 1.1634 may lead to an increase in the euro to the areas of 1.1656 and 1.1678.
• Short positions on a breakout of the level 1.1609 may lead to a decline in the euro to the areas of 1.1589 and 1.1569.

For the GBP/USD pair:

• Longs on a breakout of the level 1.3325 may lead to an increase in the pound to the areas of 1.3359 and 1.3388.
• Shorts on a breakout of the level 1.3290 may lead to a decline in the pound to the areas of 1.3249 and 1.3212.

For the USD/JPY pair:

• Longs on a breakout of the level 159.15 may lead to an increase in the dollar to the areas of 159.40 and 159.65.
• Shorts on a breakout of the level 158.85 may lead to a sell-off of the dollar to the areas of 158.55 and 158.25.

Mean Reversion Strategy (Pullback):

For the EUR/USD pair:

• Shorts will be sought after an unsuccessful breakout above 1.1633 on a return below this level.
• Longs will be sought after an unsuccessful breakout above 1.1606 on a return to this level.

For the GBP/USD pair:

• Shorts will be sought after an unsuccessful breakout above 1.3329 on a return below this level.
• Longs will be sought after an unsuccessful breakout above 1.3295 on a return to this level.

For the AUD/USD pair:

• Shorts will be sought after an unsuccessful breakout above 0.7155 on a return below this level.
• Longs will be sought after an unsuccessful breakout above 0.7118 on a return to this level.

For the USD/CAD pair:

• Shorts will be sought after an unsuccessful breakout above 1.3766 on a return below this level.
• Longs will be sought after an unsuccessful breakout above 1.3744 on a return to this level.