As we head into Friday, September 20, 2024, global forex markets are poised for heightened volatility, driven by a series of key economic data releases and central bank events. Traders are particularly focused on the latest retail sales data from the UK and Canada, alongside the Bank of Japan’s interest rate decision, which is expected to influence currency movements across the board.
The BoJ’s interest rate decision will likely be the highlight of the day, as market participants await further guidance on Japan’s monetary policy stance. While the BoJ is widely expected to maintain its ultra-loose monetary policy, any surprises could lead to significant moves in JPY pairs.
In Europe, attention will turn to retail sales data from the UK. The British pound has seen increased volatility in recent sessions, with the upcoming retail figures expected to offer fresh insights into the health of the UK economy. Traders are eager to see whether consumer spending can support economic growth or if a slowdown will add further pressure on the Bank of England’s (BoE) monetary policy decisions.
The Canadian dollar will also be in focus as Canadian retail sales and housing market data are released. The loonie remains closely linked to oil price movements, but these economic figures could shed light on the strength of the broader Canadian economy.
GBP/USD
Technicals in Focus
The GBP/USD pair showed significant volatility in recent sessions, fluctuating between the 1.3240 and 1.3285 levels. The British pound has been under pressure as market participants look ahead to the upcoming retail sales data release from the UK, which could provide insight into the strength of the British economy. The pair is currently hovering near the 1.3240 mark, which may act as a support level.
Technically, GBP/USD is facing resistance near the 1.3285 level, while the MACD indicates neutral momentum, and the RSI suggests the pair may be approaching oversold territory, which could trigger a potential rebound.
Trading Strategy: Neutral to Sell
Sell below 1.3240 with targets at 1.3210 and 1.3180, with a stop loss above 1.3270. Alternatively, consider buying above 1.3270 with targets at 1.3300 and 1.3325, with stops below 1.3240.
EUR/USD
Technicals in Focus
EUR/USD experienced sharp price movements, recently testing the 1.1120 support and 1.1170 resistance levels. The euro has been impacted by the release of Eurozone CPI data, which remained unchanged at 2.2% year-on-year, in line with expectations. This has kept the euro under pressure, with traders anticipating further volatility ahead of ECB President Lagarde’s speech.
Technically, the pair is facing resistance near 1.1170, while the MACD shows a bearish divergence, signaling weakening momentum. The RSI remains neutral, suggesting that the pair could continue to consolidate within the current range.
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/JPY
Technicals in Focus
USD/JPY has been fluctuating between 142.50 and 143.00 as traders anticipate the BoJ’s interest rate decision, which remains a crucial event for the yen. The pair saw volatility around the 143.00 level, with the yen under pressure as inflation data showed a slight uptick in Japan’s CPI to 2.8% year-on-year. Market participants are expecting more movements once the BoJ policy statement is released.
Technically, USD/JPY is nearing resistance at 143.00, with the MACD pointing to bullish momentum. However, the RSI is approaching overbought territory, signaling the possibility of a pullback.
Trading Strategy: Neutral to Buy
Buy above 143.00 with targets at 143.30 and 143.60, with a stop loss below 142.70. Alternatively, consider selling below 142.70 with targets at 142.40 and 142.10, with stops above 143.00.
Market Outlook
Looking ahead, today’s key events include Japan’s interest rate decision and retail sales data from the UK and Canada. Market participants will also keep a close eye on central bank comments for any hints of future monetary policy adjustments. As central bank actions and economic data unfold, heightened volatility is expected across the forex market, with potential for sharp moves in response to these key events.