As we head into Wednesday, December 25, 2024, the forex markets are navigating the Christmas holiday season, with low liquidity and subdued trading activity dominating the session. With most global markets closed for Christmas Day, the focus shifts to lighter economic data and reflections on pre-holiday market movements.
In the currency markets, the USD/JPY pair continued its rally, supported by upbeat U.S. consumer confidence data released earlier this week. Meanwhile, AUD/USD faced pressures from risk sentiment and expectations of slower holiday trade, while USD/CAD exhibited volatility tied to oil price fluctuations and U.S. trade balance concerns.
USD/JPY
Technicals in Focus
The USD/JPY pair extended its bullish momentum, trading above the 157.30 level during the last session before the holiday. The pair gained strength from robust U.S. economic indicators, including the recent consumer confidence uptick and solid durable goods orders data. On the technical front:
- MACD remains above the zero line, signaling continued bullish momentum.
- The Stochastic Oscillator has entered overbought territory, suggesting potential consolidation in the near term.
- The 14-day RSI is firmly in bullish territory, reflecting strong upward pressure.
Trading Strategy: Neutral to Buy
- Buy above 157.00 with targets at 157.50-157.80 and a stop loss below 156.70.
- Alternatively, consider selling below 156.70 with targets at 156.30-156.00 and stops above 157.10.
AUD/USD
Technicals in Focus
The AUD/USD pair experienced a downward drift, closing near the 0.6235 level amid thin liquidity and risk-off sentiment ahead of Christmas. The pair’s bearish bias is driven by ongoing concerns about global growth and softer Australian economic indicators:
- The MACD is trending slightly below the zero line, indicating weakening bearish momentum.
- The Stochastic Oscillator is near oversold levels, signaling a potential corrective bounce.
- The 14-day RSI remains neutral, suggesting consolidation.
Trading Strategy: Neutral to Sell
- Sell below 0.6250 with targets at 0.6220-0.6200 and a stop loss above 0.6275.
- Alternatively, consider buying above 0.6275 with targets at 0.6300-0.6330 and stops below 0.6250.
USD/CAD
Technicals in Focus
The USD/CAD pair exhibited notable volatility, initially climbing to test the 1.4400 level before retreating sharply to 1.4379. The pair’s movement reflects fluctuating oil prices and mixed U.S. data leading into the holiday break:
- The MACD has crossed below the signal line, hinting at bearish momentum.
- The Stochastic Oscillator is nearing oversold levels, suggesting potential stabilization.
- The 14-day RSI is neutral, reflecting the pair’s range-bound trading behavior.
Trading Strategy: Neutral to Sell
- Sell below 1.4390 with targets at 1.4360-1.4340 and stops above 1.4420.
- Alternatively, consider buying above 1.4420 with targets at 1.4450-1.4470 and stops below 1.4390.
Market Outlook
As markets pause for Christmas, traders are looking ahead to Thursday’s U.S. initial jobless claims data, Tokyo’s core CPI release, and Canadian industrial production numbers, which could provide clearer direction for key pairs. While liquidity remains light, volatility may spike post-holiday as traders re-enter the markets.
Overall, cautious sentiment and the holiday schedule will likely keep major pairs within defined ranges, with a focus on upcoming U.S. and Japanese economic indicators.