Eurozone PMI Data Impact EUR/USD Volatility – 25 October 2024

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As we head into Friday, 25 October 2024, forex markets are grappling with heightened volatility following key economic events. Investors are closely analyzing PMI reports from the Eurozone and the U.S., as well as the Bank of Canada’s (BoC) recent interest rate decision, which has reverberated across currency pairs. Additionally, U.S. durable goods orders and jobless claims continue to influence market sentiment, contributing to the U.S. dollar’s positioning ahead of the weekend.

The EUR/USD pair has experienced notable turbulence, with Eurozone PMI data underwhelming expectations. Meanwhile, the USD/CAD pair reflected strong market reactions to the BoC’s rate decision, leading to a spike in volatility. GBP/USD also exhibited swings as traders digested PMI figures from the UK, showing mixed performance across the services and manufacturing sectors.

EUR/USD

Technicals in Focus

The EUR/USD pair saw volatile movements, closing near the 1.0822 level after an intraday spike. The Euro struggled amid mixed Eurozone PMI reports, with the manufacturing PMI coming in stronger at 45.9 but services PMI slightly below forecasts at 51.2. The pair reacted to U.S. jobless claims, which printed better-than-expected at 227K, supporting the dollar. On the technical side, the MACD remains near the zero line, reflecting weak momentum, while the RSI hovers in neutral territory, showing indecision.

Trading Strategy: Neutral to Buy

  • Buy above 1.0825 with targets at 1.0850–1.0880, with a stop loss below 1.0800.
  • Alternatively, sell below 1.0790 with targets at 1.0760–1.0730, with a stop loss above 1.0830.

USD/CAD

Technicals in Focus

The USD/CAD pair rallied sharply, touching a high near 1.3856 following the BoC’s decision to hold rates at 3.75%. This decision, coupled with a modest rebound in crude oil prices, led to significant volatility. U.S. durable goods orders came in lower than expected at -1.1%, but the dollar retained strength as traders sought safe havens. The MACD shows growing bullish momentum, and the RSI is tilting higher, suggesting more upside potential in the short term.

Trading Strategy: Neutral to Buy

  • Buy above 1.3860 with targets at 1.3890–1.3920, with a stop loss below 1.3820.
  • Consider selling below 1.3820 with targets at 1.3790–1.3750, with stops above 1.3860.

GBP/USD

Technicals in Focus

The GBP/USD pair closed near 1.2970, reflecting mixed reactions to the UK’s PMI results. While manufacturing PMI stayed flat at 50.3, services PMI showed slight softness at 51.8, which weighed on the pound. U.S. jobless claims and U.S. manufacturing PMI at 47.8 also played into market dynamics. The MACD remains flat, indicating low momentum, while the RSI signals consolidation, hinting at a possible range-bound session ahead.

Trading Strategy: Neutral to Sell

  • Sell below 1.2950 with targets at 1.2920–1.2900, with a stop loss above 1.2980.
  • Alternatively, buy above 1.2990 with targets at 1.3020–1.3050, with stops below 1.2950.

Market Outlook

Looking ahead, Friday’s Michigan consumer sentiment and inflation expectations data will provide critical insights into the U.S. economic outlook and could influence the dollar’s trajectory. Traders will also watch Canadian retail sales data, which could impact the CAD’s performance. As central banks remain in focus, any developments from the European Central Bank and BoE speeches will be scrutinized closely by market participants.

Overall, forex markets are expected to remain volatile as traders digest economic data and adjust their positions before the weekend. The EUR/USD, USD/CAD, and GBP/USD pairs will continue to reflect investor sentiment, driven by both economic fundamentals and evolving central bank narratives.

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