As we head into Friday, August 30, 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 GDP revisions and jobless claims, while preparing for upcoming figures such as core PCE prices and Eurozone CPI. Thursday’s trading session saw mixed movements across major currency pairs, reflecting ongoing uncertainties in the global economic landscape.
EUR/USD
Technicals in Focus
The EUR/USD pair faced significant downward pressure, closing near the 1.1070 level as it extended losses from earlier in the week. The pair’s movements were heavily influenced by soft U.S. data, including the GDP revision that showed a solid 3.0% growth, which bolstered the dollar. The Eurozone’s economic outlook remains bleak, with the euro struggling to find support amid ongoing concerns about inflation and growth prospects. On the technical front, the MACD remains well below the zero line, with histograms expanding on the downside, signaling sustained bearish momentum. The Stochastic Oscillator is hovering near oversold territory, suggesting a possible short-term recovery, but 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 1.1100-1.1080 with targets at 1.1050-1.1030 and 1.1000-1.0980, with a stop loss above 1.1130. Alternatively, consider long positions above 1.1130 with targets of 1.1160-1.1190 and 1.1220-1.1250, with stops below 1.1080.
GBP/USD
Technicals in Focus
The GBP/USD pair saw sharp declines, closing near the 1.3150 level as the dollar strengthened further. The pair’s movements were largely dictated by the broader dollar dynamics, with little support for the pound coming from domestic economic data. Technically, the MACD is below the zero line, and histograms are widening on the downside, indicating increasing bearish momentum. The Stochastic Oscillator remains in oversold territory, suggesting that a short-term bounce could occur. However, the 14-day RSI continues to point downward, supporting the bearish outlook.
Trading Strategy: Neutral to Sell
Sell below 1.3180-1.3160 with targets at 1.3120-1.3100 and 1.3070-1.3050, with a stop loss above 1.3210. Consider long positions above 1.3210 with targets of 1.3240-1.3270 and 1.3300-1.3330, with stops below 1.3160.
USD/CAD
Technicals in Focus
The USD/CAD pair exhibited volatility, with the pair fluctuating around the 1.3470 level. The pair’s movement was heavily influenced by the broader dollar strength and weaker-than-expected Canadian economic data, which has continued to weigh on the loonie. The MACD is near the zero line, indicating that momentum is fading, while the Stochastic Oscillator is retreating from overbought levels, suggesting limited upside potential. The 14-day RSI remains neutral, pointing to a range-bound outlook.
Trading Strategy: Neutral to Buy
Buy above 1.3460-1.3480 with targets at 1.3510-1.3530 and 1.3560-1.3580, with a stop loss below 1.3430. Alternatively, consider selling below 1.3430 with targets of 1.3400-1.3380 and 1.3350-1.3330, with stops above 1.3480.
Market Outlook
The upcoming U.S. economic data, including core PCE prices and Eurozone CPI, 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 data and 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.