Global markets are preparing for Thursday’s session with a sense of caution, following a wave of inflation and economic activity data released mid-week. Investors continue to digest key figures out of the U.S., U.K., Canada, and Europe, while parsing central bank commentary for insight into upcoming monetary policy paths. U.S. inflation and retail data, combined with soft industrial output, put pressure on the dollar, and risk sentiment fluctuated as traders weighed weaker energy inventory figures against hawkish Fed commentary.
In the currency markets, the EUR/USD pair rebounded strongly, boosted by a softer dollar and encouraging Eurozone CPI figures, while the GBP/USD also saw renewed buying interest. Meanwhile, USD/CAD reversed after an early upside move, hit by dovish sentiment following Canada’s stable interest rate decision and firmer crude oil support for the Canadian dollar.
EUR/USD
Technicals in Focus
EUR/USD climbed steadily throughout the session, reclaiming levels above 1.1370 and currently hovering near 1.1378. The upward momentum follows stronger-than-expected U.S. retail sales paired with a dip in industrial production, which tempered dollar strength. On the technical front, the MACD histogram shows rising bullish momentum, while the Stochastic Oscillator remains in overbought territory, hinting at a potential pullback. The 14-day RSI is near 65, suggesting further upside may be limited unless fresh catalysts appear.
Trading Strategy: Neutral to Buy
Buy above 1.1375–1.1380 with targets at 1.1410–1.1440 and 1.1470, stop loss below 1.1340.
Alternatively, sell below 1.1340 with targets at 1.1310 and 1.1280, stops above 1.1380.
GBP/USD
Technicals in Focus
The GBP/USD pair followed a bullish path earlier in the session, peaking near 1.3280, before giving up gains and settling near 1.3229. This was likely a reaction to a mixed bag of U.K. employment data and modest wage growth. Technical indicators now show the MACD converging toward the signal line, suggesting waning bullish momentum. The RSI has dipped back to 50, and Stochastics have turned lower from overbought levels.
Trading Strategy: Cautious Buy or Sell on Breakout
Buy above 1.3240 with targets at 1.3270–1.3300, stop loss below 1.3200.
Sell below 1.3210 with targets at 1.3180–1.3150, stop above 1.3240.
USD/CAD
Technicals in Focus
USD/CAD experienced sharp volatility mid-session, initially rallying to 1.3970 before retreating to 1.3876. The pair’s reversal was driven by a firm BoC rate hold at 2.75% and rising oil prices, despite an increase in U.S. oil inventories. Technically, the MACD has flipped bearish, while the RSI is nearing 40. Stochastics suggest a mild recovery, but the overall trend favors further downside in the short term.
Trading Strategy: Sell on Rallies
Sell near 1.3890–1.3910 with targets at 1.3850 and 1.3815, stop loss above 1.3935.
Buy only above 1.3935 with short-term targets at 1.3970–1.3995.
Market Outlook
Looking ahead, the focus turns to upcoming U.S. jobless claims, housing starts, and the Philadelphia Fed Manufacturing Index, which will offer deeper insight into the resilience of the U.S. economy. Markets are also bracing for remarks from Fed Chair Powell and other policymakers as the Fed walks a tightrope between inflation control and supporting growth.
In Europe, traders will digest the ECB’s recent rate cut (now at 2.40%), which may add medium-term pressure to the euro unless inflation trends reverse. Meanwhile, commodity-driven currencies like the Canadian dollar may benefit from recent oil data if energy prices remain firm.