As we head into Thursday, January 30, 2025, global markets are set for a session of heightened volatility, largely influenced by U.S. GDP data, Core PCE inflation, and the Fed’s interest rate decision. The U.S. dollar has been the focal point of trading, reacting strongly to the Fed’s rate hold at 4.50% and weaker-than-expected GDP data (2.7% vs. 3.1% previous).
Meanwhile, the Eurozone GDP release has kept the EUR/USD pair under pressure, as traders weigh economic growth concerns against the ECB’s monetary policy stance. In Canada, the BoC’s rate decision and disappointing trade balance data have influenced USD/CAD volatility. The USD/JPY pair experienced sharp fluctuations, reacting to Japanese inflation data and broad U.S. dollar moves.
EUR/USD
Technicals in Focus
The EUR/USD pair struggled to find upward momentum, falling below 1.0415 after an initial rebound. The weak Eurozone GDP report fueled selling pressure, while the dollar gained strength following the Fed’s stance on inflation and rates.
- MACD: Bearish, showing a continuation of downward momentum.
- Stochastic Oscillator: Attempting a recovery, suggesting potential for a short-term bounce.
- 14-day RSI: Bearish, confirming ongoing weakness.
Trading Strategy: Neutral to Sell
- Sell below 1.0420-1.0400, targeting 1.0370-1.0350, with stop-loss above 1.0450.
- Alternatively, buy above 1.0450, targeting 1.0480-1.0510, with stops below 1.0420.
USD/CAD
Technicals in Focus
The USD/CAD pair rallied to 1.4450, supported by weaker Canadian GDP (-0.1%) and a dovish BoC rate decision. However, rising crude oil inventories (3.46M vs. 2.20M forecast) provided some strength to the Canadian dollar, limiting the upside.
- MACD: Bullish, indicating continued upward momentum.
- Stochastic Oscillator: Near overbought levels, suggesting a potential pullback.
- 14-day RSI: Bullish, reinforcing an uptrend.
Trading Strategy: Neutral to Buy
- Buy above 1.4450-1.4470, targeting 1.4500-1.4530, with stop-loss below 1.4420.
- Alternatively, sell below 1.4420, targeting 1.4380-1.4350, with stops above 1.4450.
USD/JPY
Technicals in Focus
The USD/JPY pair showed choppy movement, currently trading around 155.20 after touching a session low near 154.97. The pair was influenced by Tokyo Core CPI (2.5% YoY) and post-Fed volatility in the dollar.
- MACD: Neutral, showing indecision in momentum.
- Stochastic Oscillator: Near oversold territory, suggesting a possible bounce.
- 14-day RSI: Neutral, reflecting consolidation.
Trading Strategy: Neutral
- Buy above 155.30, targeting 155.60-156.00, with stop-loss below 154.80.
- Alternatively, sell below 154.80, targeting 154.50-154.20, with stops above 155.30.
Market Outlook
Looking ahead, traders will focus on U.S. initial jobless claims, Core PCE inflation data, and GDP Price Index, which will provide key insights into the U.S. economic outlook and Fed policy path. Meanwhile, in Europe, the ECB’s policy stance following weak GDP figures will be closely monitored for any signs of dovishness.
For USD/CAD, further volatility is expected based on BoC communications and oil market fluctuations. The Japanese yen will remain sensitive to risk sentiment and global inflation trends.
Overall, market sentiment remains highly reactive to economic data, with potential for strong price swings as traders position themselves for the next central bank moves.