As we head into Thursday, August 29, 2024, global markets are bracing for a session filled with potential volatility driven by key economic data releases and central bank communications. The U.S. dollar continues to be the focal point as traders assess the implications of recent U.S. economic data, including consumer sentiment and crude oil inventories while preparing for upcoming figures such as jobless claims and GDP revisions. Wednesday’s trading session saw mixed movements across major currency pairs, reflecting ongoing uncertainties in the global economic landscape.
In Europe, the euro remains under pressure amid ongoing concerns about the region’s economic outlook. The EUR/USD pair saw fluctuations but largely remained on a downward trend, with Eurozone CPI data and unemployment figures providing little to boost market sentiment. As the day progresses, traders will be closely watching any updates from the European Central Bank (ECB) and additional economic data that could influence the euro’s direction.
Meanwhile, the Canadian dollar has experienced significant selling pressure, with the USD/CAD pair reacting to weaker-than-expected Canadian GDP data. The loonie’s performance is likely to remain sensitive to further economic releases, particularly in the energy sector, as crude oil prices continue to play a crucial role in the currency’s valuation.
EUR/USD
Technicals in Focus
The EUR/USD pair traded within a downward trend, closing near the 1.1120 level as it extended losses from the previous sessions. The pair’s movements were heavily influenced by the soft Eurozone CPI data, which came in at 2.2% year-over-year for August, down from the previous 2.6%.
Additionally, the Eurozone’s unemployment rate remained unchanged at 6.5%, failing to provide any significant support to the euro. On the technical front, the MACD remains below the zero line, with histograms expanding on the downside, indicating sustained bearish momentum.
The Stochastic Oscillator is hovering near oversold territory, suggesting a possible short-term recovery, though the overall trend remains bearish. The 14-day RSI is also leaning towards the oversold region, reflecting the ongoing selling pressure.
Trading Strategy: Neutral to Sell
Sell below 1.1120-1.1100 with targets at 1.1070-1.1050 and 1.1020-1.1000, with a stop loss above 1.1150. Alternatively, consider long positions above 1.1150 with targets of 1.1180-1.1200 and 1.1230-1.1250, with stops below 1.1100.
USD/CAD
Technicals in Focus
The USD/CAD pair experienced a sharp decline, closing near the 1.3460 level as the Canadian dollar weakened on disappointing GDP data. Canada’s GDP for June came in at a mere 0.1%, falling short of expectations, while quarterly GDP figures were equally unimpressive. These developments fueled the loonie’s weakness, pushing the pair lower.
Technically, the MACD is well below the zero line, with histograms expanding on the downside, signaling strong bearish momentum. The Stochastic Oscillator remains in oversold territory, hinting at the potential for a technical bounce, but the 14-day RSI confirms the bearish outlook as it continues to hover near oversold levels.
Trading Strategy: Neutral to Sell
Sell below 1.3480-1.3460 with targets at 1.3430-1.3400 and 1.3370-1.3350, with a stop loss above 1.3510. Alternatively, consider long positions above 1.3510 with targets of 1.3540-1.3570 and 1.3600-1.3630, with stops below 1.3460.
USD/JPY
Technicals in Focus
The USD/JPY pair saw a moderate recovery, trading around the 144.60 level, supported by a stronger dollar and a risk-on sentiment in the markets. The pair’s movements were influenced by a mix of U.S. economic data and market positioning ahead of key data releases later in the week.
On the technical side, the MACD is just above the zero line, with histograms showing a slight expansion on the upside, indicating mild bullish momentum. The Stochastic Oscillator is retreating from overbought territory, suggesting the potential for a minor pullback. The 14-day RSI remains neutral, offering no clear directional bias.
Trading Strategy: Neutral to Buy
Buy above 144.60-144.40 with targets at 144.90-145.20 and 145.50-145.80, with a stop loss below 144.20. Alternatively, consider selling below 144.20 with targets of 143.90-143.60 and 143.30-143.00, with stops above 144.60.
Market Outlook
The upcoming U.S. economic data, including jobless claims, GDP revisions, and core PCE prices, will be pivotal as traders assess the resilience of the U.S. economy and its impact on the dollar. The market’s response to these data points could set the tone for the dollar’s trajectory in the near term.
In the Eurozone, traders will continue to monitor inflation and employment data, along with any communications from ECB officials, as they seek to gauge the central bank’s policy direction. The euro’s performance will largely hinge on these factors, as market participants weigh the likelihood of further monetary easing.
The Canadian dollar’s outlook remains closely tied to developments in the energy sector and any further economic releases. With the loonie already under pressure, additional downside risks could emerge if economic data continues to underperform.
Overall, the market is expected to remain sensitive to economic data and central bank communications, with potential for increased volatility as traders react to new information.