As we head into Wednesday, February 12, 2025, global markets remain on high alert following the release of critical U.S. inflation data. The U.S. dollar saw increased volatility after Core CPI (MoM) for January came in at 0.3%, meeting expectations but slightly lower than the previous month’s 0.4%. The CPI (YoY) figure stood at 2.9%, unchanged from the prior month, signaling a stable but cautious inflation outlook. These figures are likely to influence Federal Reserve policy expectations, keeping forex markets active.
The euro and pound experienced sharp fluctuations as traders responded to mixed economic data from the Eurozone and the U.K. Meanwhile, the Australian dollar saw increased movement amid risk sentiment shifts and anticipation of upcoming economic reports.
EUR/USD
Technicals in Focus
The EUR/USD pair experienced a strong rally following the U.S. CPI release, climbing towards 1.0347 after bouncing from recent lows near 1.0284. The pair initially dipped but reversed course as traders reassessed the Federal Reserve’s tightening outlook.
- MACD Analysis: The MACD indicator is turning bullish, with the histogram widening in positive territory, suggesting upside momentum.
- Stochastic Oscillator: Currently hovering in overbought territory, indicating that the pair could see some short-term retracement before resuming its trend.
- 14-Day RSI: Slightly above 55, reflecting bullish momentum but not yet signaling overextension.
Trading Strategy: Neutral to Buy
- Buy above 1.0340-1.0360, with targets at 1.0385-1.0410, and a stop loss below 1.0310.
- Alternatively, sell below 1.0300, with targets at 1.0280-1.0250, and a stop loss above 1.0330.
GBP/USD
Technicals in Focus
The GBP/USD pair saw a sharp reversal, recovering from lows around 1.2336 and surging above 1.2425 as market sentiment improved. The strong rebound followed BoE Governor Bailey’s comments, which hinted at a cautious approach to future rate cuts.
- MACD Analysis: The MACD is crossing above the zero line, confirming a shift in bullish momentum.
- Stochastic Oscillator: In overbought territory, suggesting a potential short-term pullback.
- 14-Day RSI: Around 60, indicating bullish sentiment but approaching resistance.
Trading Strategy: Neutral to Buy
- Buy above 1.2400-1.2430, targeting 1.2465-1.2500, with a stop loss below 1.2370.
- Alternatively, sell below 1.2370, with targets at 1.2340-1.2310, and a stop loss above 1.2405.
AUD/USD
Technicals in Focus
The AUD/USD pair exhibited a steady uptrend, breaking above 0.6280 and reaching 0.6297 following improved risk appetite and renewed interest in commodity-based currencies.
- MACD Analysis: The MACD is in positive territory, reflecting continued bullish pressure.
- Stochastic Oscillator: Currently at neutral levels, leaving room for further upside.
- 14-Day RSI: Hovering around 55, indicating steady bullish momentum.
Trading Strategy: Neutral to Buy
- Buy above 0.6280-0.6300, targeting 0.6330-0.6355, with a stop loss below 0.6250.
- Alternatively, sell below 0.6250, with targets at 0.6220-0.6200, and a stop loss above 0.6285.
Market Outlook
Looking ahead, traders will focus on upcoming U.S. retail sales data, which could provide further insights into consumer demand and inflation trends. The ECB and BoE remain key players in currency movements, with central bank commentary likely to add to market volatility.
- U.S. Retail Sales (MoM) data on February 14 will be crucial for assessing consumer spending trends.
- BoE and ECB speeches could impact the GBP and EUR, depending on any hints regarding rate adjustments.
- Market sentiment shifts will continue to influence risk-based assets like AUD/USD.
With inflation data now priced in, forex markets remain in a wait-and-see mode ahead of further key economic reports. The U.S. dollar’s next move will depend on how retail sales and Fed commentary shape rate expectations in the coming days. Expect continued volatility across major currency pairs as traders position themselves for the next wave of economic data.