As we head into Thursday, February 6, 2025, global markets are preparing for another volatile session as traders digest key economic data releases and anticipate upcoming central bank comments. The U.S. dollar remains in focus following a series of mixed economic indicators, with weaker trade balance data and disappointing ISM Non-Manufacturing PMI adding to concerns over U.S. economic momentum. Additionally, stronger-than-expected ADP Nonfarm Employment Change figures have raised speculation ahead of the upcoming NFP report.
Meanwhile, the Bank of England’s (BoE) latest rate decision and Governor Bailey’s speech provided insights into the UK’s economic trajectory, influencing GBP/USD movements. The USD/CAD pair reacted to declining oil prices and the latest Canadian economic data, while USD/JPY experienced significant downside pressure amid shifting risk sentiment and weak U.S. economic indicators.
As the market prepares for further U.S. economic data and central bank commentary, traders remain cautious, keeping an eye on potential shifts in risk appetite.
USD/JPY
Technicals in Focus
The USD/JPY pair saw a strong bearish move, closing near 152.37, after previously testing resistance at 154.34 before a sharp sell-off. This downward momentum was fueled by risk-off sentiment, weaker U.S. economic indicators, and a slight recovery in the Japanese yen as investors sought safe-haven assets.
- The MACD has shifted deeper into negative territory, indicating strong bearish momentum.
- The Stochastic Oscillator is in oversold conditions, suggesting a possible short-term rebound.
- The 14-day RSI remains below the neutral 50 level, reinforcing the ongoing bearish trend.
Trading Strategy: Bearish Bias
- Sell below 152.50-152.30 with targets at 152.00-151.80, with a stop loss above 152.80.
- Buy above 152.80 only if a reversal is confirmed, with targets at 153.20-153.50, with a stop loss below 152.50.
GBP/USD
Technicals in Focus
The GBP/USD pair maintained its bullish momentum, closing around 1.2517, following the BoE’s decision to cut rates while emphasizing a measured approach to monetary policy. The pound strengthened after initially dipping, as markets viewed the BoE’s stance as cautious rather than overly dovish.
- The MACD remains in positive territory, signaling continued bullish strength.
- The Stochastic Oscillator is approaching overbought territory, indicating a potential pullback.
- The 14-day RSI remains above 50, reflecting sustained buying pressure.
Trading Strategy: Neutral to Bullish
- Buy above 1.2520 with targets at 1.2550-1.2580, with a stop loss below 1.2490.
- Sell below 1.2490 only if a bearish reversal is confirmed, with targets at 1.2460-1.2430, with a stop loss above 1.2520.
USD/CAD
Technicals in Focus
The USD/CAD pair experienced a strong downtrend, closing near 1.4280, as the U.S. dollar weakened following disappointing economic data and oil prices attempted to stabilize. The Canadian dollar gained ground amid rising speculation about future Bank of Canada policies.
- The MACD is firmly in negative territory, signaling continued selling pressure.
- The Stochastic Oscillator is in oversold conditions, suggesting a potential short-term bounce.
- The 14-day RSI remains below 40, reinforcing the bearish sentiment.
Trading Strategy: Bearish Bias
- Sell below 1.4270 with targets at 1.4240-1.4210, with a stop loss above 1.4300.
- Buy above 1.4300 only if a corrective bounce is confirmed, with targets at 1.4340-1.4370, with a stop loss below 1.4270.
Market Outlook
Looking ahead, traders will closely monitor the U.S. jobless claims and nonfarm productivity data, as they provide further insight into labor market conditions and economic growth expectations. Additionally, the upcoming U.S. Nonfarm Payrolls (NFP) report on Friday will be a critical driver for the dollar’s performance.
In the UK, BoE Governor Bailey’s comments will continue to influence the British pound, especially regarding future rate cuts. Meanwhile, the Bank of Canada’s economic outlook will shape expectations for USD/CAD, particularly as oil price fluctuations remain a key factor.
Overall, the forex market is expected to remain sensitive to economic releases and central bank statements, with potential for heightened volatility in the coming sessions.