As we head into Monday, December 16, 2024, global markets brace for volatility, driven by key economic indicators from major economies. The focus will be on Eurozone PMIs, UK employment data, and US manufacturing figures, which are likely to shape risk sentiment and market direction. In addition, expectations surrounding the Bank of Japan’s stance on interest rates have pushed volatility higher in USD/JPY.
In the currency markets, the GBP/USD pair extended its recent decline following weak UK trade data and GDP results, with further pressure expected ahead of UK PMI and employment figures. Meanwhile, the USD/CAD pair continues to hover near highs, driven by a firm US dollar and stable crude oil prices. For the USD/JPY pair, continued strength in the US dollar and upbeat sentiment have helped maintain its upward trajectory.
GBP/USD
Technicals in Focus
The GBP/USD pair closed near 1.2615, reflecting a persistent bearish tone following disappointing UK data. The pair saw steady declines, breaking below support levels amid heightened US dollar demand. On the technical front, the MACD is firmly in bearish territory, signaling strong downside momentum. The Stochastic Oscillator remains in oversold territory, which may signal a potential near-term bounce. The 14-day RSI is below 40, reinforcing the bearish outlook.
Trading Strategy: Neutral to Sell
- Sell below 1.2630–1.2650 with targets at 1.2600–1.2580 and 1.2550–1.2530, with a stop loss above 1.2680.
- Alternatively, buy above 1.2680 with targets at 1.2700–1.2725, with stops below 1.2650.
USD/CAD
Technicals in Focus
The USD/CAD pair climbed higher, closing near 1.4230 after a strong rally driven by US dollar strength and softer Canadian retail data. The upward trend remained intact, with the pair forming higher highs and higher lows. The MACD indicator continues to display bullish momentum above the zero line. The Stochastic Oscillator is near overbought levels, suggesting a potential retracement. The 14-day RSI hovers around 65, indicating moderate bullish strength.
Trading Strategy: Neutral to Buy
- Buy above 1.4210–1.4230 with targets at 1.4260–1.4280 and 1.4300–1.4320, with stops below 1.4170.
- Alternatively, sell below 1.4170 with targets at 1.4150–1.4120, with stops above 1.4200.
USD/JPY
Technicals in Focus
The USD/JPY pair remains bullish, trading near 153.60 after breaking key resistance levels. The pair gained support from a robust US dollar and steady sentiment around Japan’s monetary policy. Technically, the MACD shows strong bullish momentum, while the Stochastic Oscillator is overbought, signaling caution for further upside. The 14-day RSI is above 70, confirming the strong bullish bias.
Trading Strategy: Neutral to Buy
- Buy above 153.40–153.60 with targets at 153.80–154.00 and 154.20–154.40, with stops below 153.10.
- Alternatively, sell below 153.00 with targets at 152.80–152.50, with stops above 153.40.
Market Outlook
Looking ahead, markets will focus on Eurozone PMIs, which will provide fresh insights into the region’s economic health. In the UK, employment data and PMI figures will set the tone for the GBP/USD pair, while the US Empire State Manufacturing Index and PMIs are likely to determine the US dollar’s near-term direction.
For USD/CAD, Canadian housing starts and oil price movements will remain key drivers, while traders in USD/JPY will watch for any new signals from the Bank of Japan on monetary policy.
Overall, volatility is expected to persist, with major currency pairs likely to react strongly to economic data and evolving risk sentiment.