As we head into Wednesday, November 20, 2024, global markets are bracing for volatility driven by key economic data releases and central bank communications. The focus remains on the U.S. dollar as traders assess mixed housing market data and look ahead to U.K. CPI figures and updates from the European Central Bank (ECB).
In the currency markets, the EUR/USD pair witnessed notable intraday fluctuations, buoyed by stable Eurozone inflation figures and market positioning ahead of the ECB’s Financial Stability Review. Meanwhile, the GBP/USD rebounded sharply in anticipation of U.K. inflation data, signaling heightened volatility around the British pound. The USD/JPY, on the other hand, displayed a mix of bearish and corrective moves as sentiment shifted amidst softer U.S. housing data and Japanese inflation figures.
EUR/USD
Technicals in Focus
The EUR/USD pair traded with increased volatility, hovering around the 1.0580 mark during the latter half of the session. The pair’s movements were influenced by Eurozone CPI data, which remained steady, and U.S. housing market data, which revealed a sharper-than-expected decline in housing starts. On the technical side, the MACD indicator is showing waning bullish momentum, with histograms turning neutral. The Stochastic Oscillator is leaning into overbought territory, suggesting potential for a near-term correction. The 14-day RSI remains neutral, reflecting the consolidation phase in the pair.
Trading Strategy: Neutral to Buy
- Buy: Above 1.0580-1.0600, targeting 1.0625-1.0650 with a stop below 1.0560.
- Sell: Below 1.0560, targeting 1.0535-1.0510, with a stop above 1.0590.
GBP/USD
Technicals in Focus
The GBP/USD rebounded strongly from a session low of 1.2620, closing near the 1.2675 mark, reflecting market optimism ahead of U.K. inflation data. On the technical front, the MACD is showing improving bullish momentum, while the Stochastic Oscillator has moved into overbought territory, signaling a potential pullback. The 14-day RSI is edging closer to overbought levels, indicating potential resistance around the 1.2700 zone.
Trading Strategy: Neutral to Buy
- Buy: Above 1.2675-1.2700, targeting 1.2725-1.2750 with a stop below 1.2650.
- Sell: Below 1.2650, targeting 1.2620-1.2590, with stops above 1.2680.
USD/JPY
Technicals in Focus
The USD/JPY pair oscillated sharply, hitting a session low of 154.00 before rebounding toward the 154.40 level. The pair’s performance reflected cautious market sentiment amidst softer U.S. housing data and steady Japanese inflation figures. On the technical front, the MACD has crossed above the signal line, suggesting a potential short-term bullish correction. The Stochastic Oscillator is nearing overbought territory, indicating the possibility of resistance near 154.80. The 14-day RSI remains neutral.
Trading Strategy: Neutral to Sell
- Sell: Below 154.40-154.00, targeting 153.70-153.50, with stops above 154.80.
- Buy: Above 154.80, targeting 155.10-155.40, with stops below 154.40.
Market Outlook
Looking ahead, traders are expected to focus on key data releases, including U.K. CPI figures and the ECB’s Financial Stability Review. The U.S. Federal Reserve’s commentary will also be closely monitored for hints on future policy direction amidst ongoing inflationary pressures and economic uncertainty.
In the U.K., inflation data is likely to drive movements in GBP/USD, with any surprises potentially influencing expectations for Bank of England policy adjustments. For the Eurozone, updates from the ECB may provide insight into the region’s financial stability and policy stance. Meanwhile, the Japanese yen’s performance will hinge on the outcome of inflation readings and broader risk sentiment.
Overall, the market is expected to remain highly reactive to economic data and central bank communications, presenting opportunities for intraday traders.