The dollar weakened sharply against risk assets. On the one hand, the situation around Venezuela has eased somewhat, as it did not escalate into a full-scale conflict. On the other hand, weak US manufacturing activity reminded traders that not everything is as good as it might have seemed at first glance.

As the data showed, in December 2025 US manufacturing activity declined to 47.9 points. Traders reacted immediately to this drop, realizing that it could signal a deeper economic slowdown and put pressure on the Federal Reserve regarding future monetary policy. The European currency, by contrast, strengthened, fueled by hopes that the European Central Bank would remain more hawkish. The divergence in monetary policy outlooks between the Fed and the ECB became an additional factor shaping currency market dynamics.

Today, the rise in the EUR/USD pair may continue. Strong readings are expected for the eurozone services PMI and the composite PMI. Optimistic data from Europe would give the euro additional momentum, strengthening it against the weakened dollar. Given that the outlook for the eurozone remains fairly bright—especially in the services sector, which is showing signs of recovery—the euro may respond with further gains. The composite PMI, which combines manufacturing and services activity, is also expected to show positive dynamics, signaling more balanced economic growth.

As for the pound, figures for the UK services PMI and the composite PMI are also expected in the first half of the day and are very important for the economy. These indicators act as a kind of barometer, reflecting the state of the UK economy and business sentiment. Traders are closely watching these data, as they may provide valuable clues regarding the future monetary policy of the Bank of England.

If the data match economists' expectations, it is better to act based on the Mean Reversion strategy. If the data turn out to be significantly higher or lower than expectations, the Momentum strategy is preferable.

Momentum Strategy (Breakout Trading)

For EUR/USD

• Buying on a breakout above 1.1745 may lead to euro growth toward 1.1770 and 1.1800;
• Selling on a breakout below 1.1715 may lead to a decline toward 1.1690 and 1.1662.

For GBP/USD

• Buying on a breakout above 1.3561 may lead to pound growth toward 1.3590 and 1.3622;
• Selling on a breakout below 1.3531 may lead to a decline toward 1.3500 and 1.3471.

For USD/JPY

• Buying on a breakout above 156.68 may lead to dollar growth toward 157.05 and 157.40;
• Selling on a breakout below 156.30 may lead to dollar selling toward 155.99 and 155.67.

Mean Reversion Strategy (Pullback Trading)

For EUR/USD

• I will look for selling after a failed attempt to break above 1.1753, followed by a return below this level;
• I will look for buying after a failed attempt to break below 1.1704, followed by a return to this level.

For GBP/USD

• I will look for selling after a failed attempt to break above 1.3578, followed by a return below this level;
• I will look for buying after a failed attempt to break below 1.3521, followed by a return to this level.

For AUD/USD

• I will look for selling after a failed attempt to break above 0.6749, followed by a return below this level;
• I will look for buying after a failed attempt to break below 0.6715, followed by a return to this level.

For USD/CAD

• I will look for selling after a failed attempt to break above 1.3777, followed by a return below this level;
• I will look for buying after a failed attempt to break below 1.3750, followed by a return to this level.