As we head into Wednesday, September 18, 2024, global forex markets are poised for heightened volatility, driven by a slew of important economic releases and central bank projections. The US dollar remains in sharp focus as traders brace for today’s US interest rate projections.
Projections are set to be released by the Federal Reserve, which will provide critical insights into the future path of monetary policy. The housing starts data, also due for release, is expected to shed light on the health of the U.S. housing market, further influencing the dollar’s direction. Market participants are eager for clarity as the Fed’s monetary policy stance continues to influence risk sentiment across markets.
In Europe, attention will turn to inflation data from the Eurozone, with the latest Consumer Price Index (CPI) figures expected to offer clues on the European Central Bank’s (ECB) next steps. The euro has been under pressure recently, as slow growth across the Eurozone and persistent inflation concerns weigh on the single currency. Today’s release will be a crucial marker for traders gauging whether the ECB will maintain its current policy stance or adjust in response to the inflationary environment.
Meanwhile, the British pound will also be in focus as U.K. inflation data, due later today, will provide a key indicator for the Bank of England’s (BoE) upcoming policy decisions. The BoE is facing a balancing act between taming inflation and fostering economic growth, and today’s inflation data will offer critical insights into the U.K.’s economic conditions ahead of the BoE’s rate decision on Thursday.
Commodity-driven currencies, including the Australian and Canadian dollars, are similarly under scrutiny. The Australian dollar has shown volatility ahead of this week’s employment data, with traders expecting that Australia’s labor market performance will influence the Reserve Bank of Australia’s (RBA) stance on monetary policy.
The Canadian dollar, on the other hand, remains closely linked to fluctuations in oil prices, with upcoming crude oil inventory data expected to impact the loonie’s movements. Furthermore, housing data from Canada could shed light on the strength of the Canadian economy.
Overall, the forex market is expected to experience increased forex market volatility today as traders navigate the confluence of economic data releases and central bank projections, including the US interest rate projections. As uncertainty looms over the Fed’s interest rate trajectory and inflation dynamics in both the Eurozone and the U.K., market participants are preparing for swift and potentially sharp price movements.
AUD/USD
Technicals in Focus – US Interest Rate Projections
The AUD/USD pair experienced notable swings in the past trading sessions, fluctuating between the 0.6735 and 0.6765 levels. The Australian dollar showed some strength as it rebounded from its lows but faced resistance near the 0.6760 mark. Market participants are closely monitoring employment change and unemployment rate data, set to be released later this week, which could drive further movement in the pair.
On the technical side, the pair is trading near resistance levels, with the MACD showing signs of bullish momentum. However, the RSI is approaching overbought territory, indicating potential consolidation or a pullback.
Trading Strategy: Neutral to Buy
Buy above 0.6760 with targets at 0.6790 and 0.6820, with a stop loss below 0.6730. Alternatively, consider selling below 0.6730 with targets at 0.6700 and 0.6670, with stops above 0.6760.
EUR/USD
Technicals in Focus – US Interest Rate Projections
The EUR/USD pair has been trading within a relatively tight range, fluctuating between 1.1110 and 1.1140. The euro remains under pressure as Eurozone inflation data and U.S. dollar strength continue to drive price action ahead of US interest rate projections. Despite a brief surge, the euro has been unable to sustain gains above the 1.1130 mark.
Technically, the pair is facing resistance near the 1.1125 level, with the MACD pointing to weakening bullish momentum. The RSI remains in neutral territory, suggesting potential for either further consolidation or a breakout depending on upcoming data releases.
Trading Strategy: Neutral to Sell
Sell below 1.1120 with targets at 1.1090 and 1.1060, with a stop loss above 1.1150. Alternatively, consider buying above 1.1150 with targets at 1.1180 and 1.1200, with stops below 1.1120.
USD/CAD
Technicals in Focus – US Interest Rate Projections
The USD/CAD pair exhibited sharp movements, testing both the 1.3600 resistance and the 1.3570 support levels. The Canadian dollar’s movements were largely influenced by fluctuations in oil prices and recent inflation data. The pair’s recent volatility reflects market positioning ahead of upcoming Canadian housing data and U.S. crude oil inventories.
Technically, the pair is trading just below the 1.3600 resistance level, with the MACD showing some bearish momentum. The RSI is neutral, reflecting indecision as traders await further economic data to provide clarity on direction.
Trading Strategy: Neutral to Sell
Sell below 1.3580 with targets at 1.3550 and 1.3520, with a stop loss above 1.3610. Alternatively, consider buying above 1.3610 with targets at 1.3640 and 1.3670, with stops below 1.3580.
Market Outlook on US Interest Rate Projections
Looking ahead, today’s key events include US interest rate projections and housing starts data, which are expected to have a significant impact on the U.S. dollar. Additionally, traders will keep an eye on Eurozone inflation data and Canadian economic releases. Volatility is expected to remain elevated as central bank communications and economic data drive market sentiment.