As we head into Monday, September 16, 2024, forex market volatility rises and we are in for a week filled with significant economic events that could set the stage for heightened volatility.
Traders will be closely monitoring data releases and central bank communications from major economies, which are likely to drive price movements across key currency pairs. The U.S. dollar remains the focal point of attention following mixed economic data, and its trajectory will likely be influenced by today’s NY Empire State Manufacturing Index and upcoming speeches from Federal Reserve members.
The euro remains under pressure as market participants await speeches from key ECB officials, including President Christine Lagarde, and data related to the region’s trade balance. Concerns about inflation and the ECB’s monetary policy outlook continue to weigh on the euro, despite some encouraging economic signals from other Eurozone nations.
Meanwhile, the British pound is bracing for a busy week as traders anticipate the Bank of England’s (BoE) interest rate decision on Thursday. With U.K. retail sales data also expected later in the week, the GBP/USD pair could see substantial volatility. In addition, speeches from BoE officials early in the week are expected to provide crucial guidance on the central bank’s monetary policy stance amidst ongoing inflationary pressures.
The New Zealand dollar remains in focus after a sharp contraction in Q2 GDP, with traders reassessing their positions following the release of disappointing data. As risk sentiment continues to influence the NZD/USD pair, upcoming U.S. economic figures and Fed announcements will be pivotal in determining the pair’s direction.
Looking at commodity-driven currencies, the Canadian dollar is closely linked to movements in oil prices, which have shown some volatility following U.S. crude oil inventory reports and Baker Hughes rig count data. As the week unfolds, traders will watch for developments in Canada’s core inflation data and any guidance from the Bank of Canada.
EUR/USD
Technicals in Focus
The EUR/USD pair exhibited a choppy session over the last few trading days, closing near the 1.1075 level. The pair’s recent movements have been impacted by a series of economic data releases and anticipation around U.S. data this week. Despite a brief surge, the euro was unable to sustain gains and has pulled back from its highs.
On the technical front, the EUR/USD has shown a downward shift after touching highs around 1.1095, with the price now consolidating around the 1.1075 mark. The MACD indicator shows slowing bullish momentum, while the RSI remains neutral, reflecting indecision in the market.
Trading Strategy: Neutral to Sell
Sell below 1.1075 with targets at 1.1040 and 1.1010, with a stop loss above 1.1100. Alternatively, consider long positions above 1.1100, targeting 1.1130 and 1.1160, with stops below 1.1075.
GBP/USD
Technicals in Focus
The GBP/USD pair saw a similar pattern, climbing to recent highs of 1.3150 before retreating to 1.3120. The British pound has been under pressure ahead of the Bank of England’s (BoE) rate decision this week, with retail sales data due later in the week also being closely watched.
Technically, the GBP/USD has seen a pullback after reaching its recent peak, with the MACD showing declining bullish momentum. The RSI remains neutral, suggesting consolidation in the near term.
Trading Strategy: Neutral to Sell
Sell below 1.3120 with targets at 1.3090 and 1.3060, with a stop loss above 1.3150. Alternatively, consider buying above 1.3150, targeting 1.3180 and 1.3210, with stops below 1.3120.
NZD/USD
Technicals in Focus
The NZD/USD pair experienced heightened forex market volatility, particularly following the release of New Zealand GDP data, which showed a contraction of -0.4% for Q2 2024. The pair initially spiked up to 0.6180 but faced a sharp sell-off, closing around 0.6156.
On the technical side, the pair is trading near its lower range, with the MACD pointing to increased bearish momentum. The RSI is also leaning towards oversold territory, indicating that a corrective bounce might be in store.
Trading Strategy: Neutral to Buy
Buy above 0.6150 with targets at 0.6180 and 0.6210, with a stop loss below 0.6120. Alternatively, consider selling below 0.6120, targeting 0.6090 and 0.6060, with stops above 0.6150.
Forex Market Volatility
Looking ahead, this week’s U.S. data, including the NY Empire State Manufacturing Index, and speeches from ECB and Federal Reserve members, will be closely watched. The Bank of England’s interest rate decision on Thursday will be a key event for GBP pairs. Moreover, risk sentiment across markets, especially in light of global growth concerns, will play a crucial role in determining price action for the NZD and AUD.
Forex market volatility is expected to remain elevated as traders await further clarity on central bank policy outlooks and key economic data.