The euro and the pound continued selling off against the dollar after U.S. inflation rose in June and President Donald Trump announced plans to introduce tariffs on pharmaceutical products and semiconductors by the end of the month.

The U.S. Consumer Price Index (CPI) rose by 0.3% in June, marking the largest monthly increase since January. On a year-over-year basis, inflation accelerated to 2.7%, exceeding the 2.4% recorded in May. The rise in inflation has prompted traders once again to reassess the outlook for the Federal Reserve's monetary policy. Expectations for persistently high interest rates in the coming months have strengthened, in turn boosting the dollar against other major currencies. Rising energy and food prices significantly contributed to the increase in the CPI. Core inflation, which excludes these volatile components, also showed some growth, indicating broader inflationary pressure in the economy.

Trump's announcement yesterday of tariffs on pharmaceuticals and semiconductors served as a catalyst for pressure on risk assets, while simultaneously supporting the U.S. dollar. The move triggered a wave of concern among investors, already uneasy about the outlook for global economic growth and the escalation of trade conflicts. Introducing tariffs on pharmaceuticals and semiconductors—key sectors for many countries—will not only disrupt supply chains but could also drive up consumer prices.

Today, the market awaits data on the eurozone trade balance and Italy's CPI. These reports may influence investor perception of the region's economic stability and growth prospects, but are unlikely to cause significant shifts in the currency market. Positive data may support the euro, while weak figures could lead to a decline in its exchange rate.

As for the British pound, it may have a chance to strengthen today, but only if the UK inflation data comes in above economists' forecasts. In the current environment of heightened economic uncertainty, inflation figures assume added significance. Stronger-than-expected inflation could push the Bank of England to adopt a more hawkish stance, thereby supporting the pound.

If the data aligns with economists' expectations, it is best to trade based on the Mean Reversion strategy. If the figures come in significantly above or below forecasts, the Momentum strategy is preferred.

Momentum Strategy (Breakout):

EUR/USD

Buying a breakout above 1.1626 could lead to a rise toward 1.1658 and 1.1691

Selling a breakout below 1.1594 could lead to a drop toward 1.1550 and 1.1498

GBP/USD

Buying a breakout above 1.3410 could lead to a rise toward 1.3445 and 1.3480

Selling a breakout below 1.3375 could lead to a drop toward 1.3335 and 1.3290

USD/JPY

Buying a breakout above 149.00 could lead to a rise toward 149.30 and 149.60

Selling a breakout below 148.60 could lead to a drop toward 148.28 and 147.95

Mean Reversion Strategy (Pullbacks):

EUR/USD

Looking for short positions after a failed breakout above 1.1635, on a return below this level

Looking for long positions after a failed breakout below 1.1592, on a return to this level

GBP/USD

Looking for short positions after a failed breakout above 1.3405, on a return below this level

Looking for long positions after a failed breakout below 1.3373, on a return to this level

AUD/USD

Looking for short positions after a failed breakout above 0.6543, on a return below this level

Looking for long positions after a failed breakout below 0.6509, on a return to this level

USD/CAD

Looking for short positions after a failed breakout above 1.3726, on a return below this level

Looking for long positions after a failed breakout below 1.3705, on a return to this level