The dollar strengthened against a number of risk assets following US inflation data.

The US consumer price index for December once again provided direct evidence that the Federal Reserve will not be cutting rates in the near term. This increased demand for the dollar.

Traders are now watching every Fed move closely, since any hint of a change in monetary policy has a significant impact on global financial markets. Persistent inflation above the 2% target keeps the central bank cautious, as reflected in the price of the US currency. Higher interest rates make the dollar more attractive to traders seeking safe assets and stable returns.

Today, there is no eurozone data, nor are there any reasons to buy the euro against the dollar. However, the absence of news itself can become news. Markets, which are prone to cyclicality, often correct after periods of decline, and one should be prepared for that. But in the current situation, with investors' attention fixed on the US and the Fed's next steps, the euro remains in the shadows.

As for the pound, there is also no data scheduled today. Only a speech by Bank of England Monetary Policy Committee member Alan Taylor is expected. Traders will closely watch his rhetoric regarding the current UK economic situation and prospects for monetary policy. Particular attention will be paid to any hints of possible interest rate changes in the near future and assessments of the geopolitical situation's impact on the British economy. In the absence of significant macro releases, Taylor's remarks may become the key event of the day.

If data match economists' expectations, it is better to act using a Mean Reversion strategy. If the data are much higher or lower than expectations, it is best to use a Momentum strategy.

Momentum Strategy (on breakout):

For EURUSD

Buying on a breakout of 1.1653 may lead to the euro rising toward 1.1676 and 1.1697;

Selling on a breakout of 1.1624 may lead to the euro falling toward 1.1591 and 1.1558;

For GBPUSD

Buying on a breakout of 1.3452 may lead to the pound rising toward 1.3484 and 1.3514;

Selling on a breakout of 1.3417 may lead the pound to fall toward 1.3392 and 1.3370;

For USDJPY

Buying on a breakout of 159.44 may lead to the dollar rising toward 159.72 and 159.94;

Selling on a breakout of 159.12 may lead to dollar sell-offs toward 158.75 and 158.46;

Mean Reversion Strategy (on return):

For EURUSD

I will look for short positions after a failed breakout above 1.1656 on the return below that level;

I will look for long positions after a failed breakout above 1.1632 on the return to that level;

For GBPUSD

I will look for shorts after a failed breakout above 1.3458 on the return below that level;

I will look for longs after a failed breakout above 1.3410 on the return to that level;

For AUDUSD

I will look for shorts after a failed breakout above 0.6710 on the return below that level;

I will look for longs after a failed breakout above 0.6680 on the return to that level;

For USDCAD

I will look for shorts after a failed breakout above 1.3901 on the return below that level;

I will look for longs after a failed breakout above 1.3876 on the return to that level;