As we head into Friday, February 14, 2025, global markets remain highly reactive to key economic data releases, particularly from the United States and the United Kingdom. The U.S. dollar has experienced fluctuations as traders digest the latest U.S. Core CPI report, which showed higher-than-expected inflation, sparking speculation over the Federal Reserve’s next policy moves. Additionally, U.S. retail sales and industrial production figures will be closely watched in the upcoming session.
In the currency markets, the EUR/USD pair rallied strongly, reflecting dollar weakness following the CPI release. The euro also found support from better-than-expected GDP data from the Eurozone, although industrial production figures missed expectations.
Meanwhile, the GBP/USD pair surged, supported by strong UK GDP growth (1.4% YoY vs. 1.1% expected) and a surprise uptick in manufacturing production. However, concerns over weak business investment (-3.2% QoQ) and broader trade balance figures may limit further gains.
The AUD/USD pair posted a sharp rebound, fueled by broad risk-on sentiment and a softer U.S. dollar. Investors are now awaiting additional cues from U.S. retail sales and global risk sentiment.
EUR/USD
Technicals in Focus
The EUR/USD pair experienced strong bullish momentum, closing near 1.0439, as traders reacted to the U.S. Core CPI release (3.3% YoY vs. 3.1% forecast), which initially strengthened the dollar before triggering a sell-off on concerns that inflation might slow down economic growth.
On the technical front:
- The MACD is showing a bullish crossover, indicating upward momentum.
- The Stochastic Oscillator is in overbought territory, suggesting a possible short-term pullback.
- The 14-day RSI is pointing upwards, reflecting strong buying pressure.
Trading Strategy: Neutral to Buy
- Buy above 1.0435-1.0450 with targets at 1.0480-1.0510 and 1.0535-1.0560, with a stop-loss below 1.0400.
- Alternatively, sell below 1.0400 with targets at 1.0370-1.0340, with stops above 1.0440.
GBP/USD
Technicals in Focus
The GBP/USD pair climbed sharply to 1.2539, following strong UK GDP growth and better-than-expected manufacturing production (0.7% MoM vs. 0.0% forecast). However, weak business investment (-3.2% QoQ) remains a concern for the UK economy.
On the technical front:
- The MACD is firmly in bullish territory, signaling sustained buying pressure.
- The Stochastic Oscillator is approaching overbought conditions, hinting at a possible retracement.
- The 14-day RSI is in a strong upward trend, supporting the bullish bias.
Trading Strategy: Neutral to Buy
- Buy above 1.2525-1.2550 with targets at 1.2580-1.2615 and 1.2650-1.2685, with a stop-loss below 1.2490.
- Alternatively, sell below 1.2490 with targets at 1.2450-1.2415, with stops above 1.2530.
AUD/USD
Technicals in Focus
The AUD/USD pair experienced a strong rebound to 0.6305, driven by broad risk-on sentiment and U.S. dollar weakness following the inflation report. Investors are closely monitoring upcoming U.S. retail sales data, which could impact the greenback.
On the technical front:
- The MACD has turned bullish, signaling renewed upside potential.
- The Stochastic Oscillator is rising but has not yet entered overbought territory.
- The 14-day RSI suggests continued strength in the current uptrend.
Trading Strategy: Neutral to Buy
- Buy above 0.6295-0.6310 with targets at 0.6335-0.6360 and 0.6390-0.6415, with a stop-loss below 0.6265.
- Alternatively, sell below 0.6265 with targets at 0.6235-0.6210, with stops above 0.6300.
Market Outlook
Looking ahead, traders will closely monitor:
- U.S. Retail Sales (MoM) (Jan) – A weaker-than-expected figure could add further pressure on the U.S. dollar.
- U.S. Industrial Production (MoM) (Jan) – A decline in output may increase concerns over economic growth.
- Federal Reserve Commentary – Any additional comments from Fed officials could shape market sentiment.
Additionally, movements in the energy markets, particularly following the larger-than-expected crude oil inventory build (+4.07M vs. 2.4M expected), could influence risk appetite and commodity-linked currencies such as the AUD/USD.
Overall, the forex market is expected to remain volatile as traders react to new economic data and central bank signals.