As we head into Wednesday, October 2, 2024, global markets are bracing for a session that could see heightened volatility, driven by significant economic data releases. The U.S. dollar remains in focus as traders react to a busy economic calendar, including U.S. ISM Manufacturing data, JOLTs Job Openings, and speeches from key Federal Reserve members. With the upcoming Nonfarm Payrolls report later in the week, traders are positioning themselves ahead of these major announcements.
In the currency markets, the EUR/USD pair experienced a choppy session, influenced by mixed economic signals from the Eurozone and the U.S. Meanwhile, GBP/USD saw heightened volatility as concerns about the UK’s economic outlook persisted, while USD/JPY remained steady as traders digested recent developments in the Japanese manufacturing sector and ongoing U.S. economic releases.
EUR/USD
Technicals in Focus
The EUR/USD pair traded with volatility, closing near the 1.1147 level after oscillating throughout the session. The pair’s movements were largely influenced by mixed Eurozone data and U.S. dollar strength ahead of key economic events. The EUR/USD opened the week around 1.1180 but saw a sharp decline on Monday, September 30, dropping below the 1.1150 mark, as U.S. economic data outpaced that of the Eurozone.
On the technical front, the MACD indicator is approaching the zero line, suggesting neutral momentum with a slight bearish bias. The Stochastic Oscillator shows signs of oversold conditions, indicating that a potential rebound may be on the horizon. The 14-day RSI hovers in neutral territory, reflecting the pair’s current range-bound behavior.
Trading Strategy: Neutral to Sell
- Sell below 1.1150-1.1120 with targets at 1.1080-1.1050 and 1.1020, with a stop loss above 1.1180.
- Alternatively, consider long positions above 1.1180 with targets of 1.1210-1.1240, with stops below 1.1140.
GBP/USD
Technicals in Focus
The GBP/USD pair traded near 1.3401 after a volatile session, largely driven by concerns over the UK’s economic outlook following soft GDP figures and poor current account data. The British pound fell sharply on Monday, September 30, as traders braced for U.S. economic data.
On the technical side, the MACD shows a bearish crossover, with the signal line trending downward. The Stochastic Oscillator is entering oversold territory, suggesting that a potential corrective bounce could be forthcoming. However, the 14-day RSI remains neutral, offering no clear directional bias.
Trading Strategy: Neutral to Sell
- Sell below 1.3410-1.3380 with targets at 1.3350-1.3320 and 1.3280, with a stop loss above 1.3440.
- Alternatively, consider long positions above 1.3440 with targets of 1.3470-1.3500, with stops below 1.3410.
USD/JPY
Technicals in Focus
The USD/JPY pair traded near 143.15, exhibiting notable strength throughout the session. The pair continues to trend higher, supported by a rebound in U.S. Treasury yields and better-than-expected U.S. data. Japanese data, including the Tankan Manufacturing Index, provided little support to the yen, while the broader strength in the dollar weighed on the pair.
On the technical front, the MACD remains bullish, with strong momentum supporting the dollar. The Stochastic Oscillator is approaching overbought levels, signaling caution for those holding long positions. The 14-day RSI is neutral, reflecting consolidation near current levels.
Trading Strategy: Neutral to Buy
- Buy above 143.00-142.80 with targets at 143.50-143.80 and 144.00, with a stop loss below 142.60.
- Alternatively, consider selling below 142.60 with targets of 142.30-142.00, with stops above 143.10.
Market Outlook
Looking ahead, the U.S. ISM Manufacturing PMI, ISM Employment, and JOLTs Job Openings will be key events to monitor as traders assess the strength of the U.S. economy. The GBP/USD will be sensitive to any developments from the BoE and broader UK economic data, particularly after weaker-than-expected GDP growth and a widening current account deficit.
In Japan, the yen is likely to remain under pressure as traders keep an eye on the Tankan Large Manufacturing Index and the broader global risk sentiment. Meanwhile, the euro remains at the mercy of U.S. data, with the upcoming Nonfarm Payrolls and other labor market reports likely to dictate further moves.
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.