As we head into Tuesday, December 17, 2024, global markets are bracing for increased volatility, driven by a series of high-impact economic data releases. With the year drawing to a close, traders are positioning themselves ahead of key reports that will influence monetary policy decisions and overall risk sentiment. Notably, the UK labor market report, U.S. manufacturing data, and lingering reactions to the Federal Reserve’s recent interest rate stance will remain key drivers for the forex market.
The GBP/USD is facing renewed focus amid critical UK employment data and wage growth figures, while USD/JPY continues to consolidate near multi-month highs as traders assess the Bank of Japan’s policy stance against U.S. economic strength. Meanwhile, the USD/CAD pair remains in a tight range, influenced by oil market dynamics and housing data from Canada. These events collectively point to a session where currency markets may experience sharp, reactionary movements.
GBP/USD
Technicals in Focus
The GBP/USD pair rebounded slightly, closing near 1.2685 after a sharp recovery in the previous session. The move came as traders digested the UK employment data and rising average earnings, which signaled resilience in the labor market. However, concerns over persistent inflation and upcoming Bank of England’s monetary policy outlook weighed on the pound.
- MACD: The indicator is trending higher but remains below the zero line, suggesting a lack of sustained bullish momentum.
- Stochastic Oscillator: Hovering near overbought territory, indicating potential for short-term pullbacks.
- 14-Day RSI: Neutral at 52, reflecting consolidation around current levels.
Trading Strategy: Neutral to Buy
- Buy above 1.2680-1.2660 with targets at 1.2705-1.2730 and a stop loss below 1.2635.
- Alternatively, sell below 1.2635 for downside targets of 1.2600-1.2570, with stops above 1.2680.
USD/JPY
Technicals in Focus
The USD/JPY pair showed signs of consolidation near 154.11 after testing highs around 154.35 earlier in the session. The movement reflected the mixed sentiment from the Bank of Japan’s rate decision and strong U.S. economic releases. The BoJ maintained rates at 0.25%, which kept the yen under pressure, while U.S. dollar strength persisted.
- MACD: The histogram shows waning bullish momentum, hinting at a possible corrective move.
- Stochastic Oscillator: Neutral but slightly turning lower, signaling potential exhaustion.
- 14-Day RSI: Steady near 58, indicating bullish bias but not overextended.
Trading Strategy: Neutral to Buy
- Buy above 154.10-153.90 with targets at 154.50-154.80 and stops below 153.70.
- Alternatively, sell below 153.70 for downside targets of 153.40-153.20, with stops above 154.10.
USD/CAD
Technicals in Focus
The USD/CAD pair struggled to find direction, trading around 1.4233 after a volatile session. The Canadian dollar showed resilience on the back of improved oil prices and stronger-than-expected housing starts. However, U.S. economic data and continued uncertainty over Fed policy limited CAD gains.
- MACD: Flat near the zero line, reflecting indecision in the market.
- Stochastic Oscillator: Neutral, showing a lack of clear momentum.
- 14-Day RSI: Stable at 49, confirming range-bound movement.
Trading Strategy: Neutral
- Sell below 1.4230-1.4200 with targets at 1.4180-1.4160 and stops above 1.4260.
- Alternatively, buy above 1.4260 for upside targets at 1.4285-1.4300, with stops below 1.4230.
Market Outlook
Looking ahead, traders will pay close attention to:
- UK Employment Data – Key for understanding the labor market’s strength and its impact on BoE’s inflation outlook.
- U.S. Empire State Manufacturing Index – A closely watched gauge of industrial performance that may reflect broader economic resilience.
- Federal Reserve Communications – Ongoing assessments of the Fed’s interest rate path will continue to influence market sentiment and the U.S. dollar.
With year-end positioning and critical economic data on the horizon, markets are likely to experience heightened volatility, creating both opportunities and risks. Traders should remain alert to sharp moves and closely monitor developments across key regions.