As we head into Wednesday, October 16, 2024, global markets are set for a session with potential volatility driven by significant economic data releases. The focus remains on inflation figures from the UK and Japan, alongside US housing data and retail sales figures. The release of these data points will influence market sentiment and likely cause fluctuations in major currency pairs.
In the currency markets, the GBP/USD pair experienced notable movement, reflecting the release of weak UK employment data combined with looming CPI figures. The British pound remains under pressure despite a brief upward recovery, as traders await further signals from both the Bank of England and the broader UK economic outlook.
Meanwhile, the EUR/USD pair remained in choppy territory, influenced by mixed Eurozone data. The euro continues to be weighed down by geopolitical concerns and a cautious economic outlook despite a minor recovery in sentiment driven by improved ZEW Economic Sentiment figures.
The USD/CAD pair also showed sharp fluctuations in light of Canadian inflation data, with the loonie gaining strength earlier in the session but retreating as traders brace for upcoming retail sales figures and CPI data. The pair continues to reflect the market’s sensitivity to inflationary concerns and positioning ahead of the Bank of Canada’s potential moves.
EUR/USD
Technicals in Focus
The EUR/USD pair fluctuated throughout the session, closing near the 1.0905 level after testing both upside and downside support. Mixed Eurozone data, particularly ZEW Economic Sentiment, gave some relief to the euro, but ongoing concerns surrounding global trade and geopolitical tensions kept the pair subdued. On the technical front, the MACD indicator remains near the zero line, suggesting indecision, while the Stochastic Oscillator signals oversold conditions, indicating a potential for some upward correction. The 14-day RSI hovers around neutral, reflecting the pair’s range-bound behavior.
Trading Strategy: Neutral to Buy
Buy above 1.0910 with targets at 1.0940-1.0970, with a stop loss below 1.0890. Alternatively, consider selling below 1.0890 with targets of 1.0860-1.0830, with stops above 1.0910.
GBP/USD
Technicals in Focus
The GBP/USD pair saw significant volatility, closing near the 1.3090 level after a temporary recovery during the session. Weak UK employment data and anticipation of upcoming CPI releases have kept pressure on the British pound. On the technical side, the MACD is approaching bearish territory, indicating a potential shift lower, while the Stochastic Oscillator suggests overbought conditions, hinting at possible downside momentum. The 14-day RSI is hovering around neutral, indicating some hesitation in direction.
Trading Strategy: Neutral to Sell
Sell below 1.3100 with targets at 1.3060-1.3030, with a stop loss above 1.3130. Alternatively, consider buying above 1.3130 with targets at 1.3160-1.3190, with stops below 1.3100.
USD/CAD
Technicals in Focus
The USD/CAD pair experienced sharp movements, closing near the 1.3800 level after testing both resistance and support levels. Canadian inflation data sparked initial volatility, but the pair retreated as traders positioned themselves ahead of further data releases. The MACD remains in neutral territory, while the Stochastic Oscillator is moving toward oversold levels, suggesting a potential upward correction. The 14-day RSI remains neutral, offering no strong directional bias.
Trading Strategy: Neutral to Buy
Buy above 1.3810 with targets at 1.3840-1.3870, with a stop loss below 1.3780. Alternatively, consider selling below 1.3780 with targets at 1.3750-1.3720, with stops above 1.3810.
Market Outlook
Looking ahead, traders will be closely monitoring the release of UK CPI data and Japan’s inflation figures, as they will provide key insights into the monetary policy outlook for both regions. US housing data, including building permits and housing starts, will also be in focus as they could provide a clearer picture of the state of the US economy. With inflation remaining a central theme in global markets, any surprises in these figures could lead to heightened volatility across currency pairs.
Overall, the market is expected to remain sensitive to economic data and central bank communications, with potential for increased volatility as traders react to new information.