As we move into Friday, February 7, 2025, global markets are gearing up for a high-volatility session driven by key economic releases and central bank decisions. The U.S. dollar remains the focal point, with traders closely monitoring the latest U.S. Nonfarm Payrolls (NFP) report, which is expected to influence market sentiment and shape the Federal Reserve’s policy outlook.
The Bank of England’s (BoE) interest rate decision sparked significant price movements in GBP/USD, as the central bank kept rates unchanged at 4.50%, while the vote distribution indicated a more dovish bias. Meanwhile, USD/CAD faced selling pressure as Canada’s Ivey PMI missed expectations, signaling economic slowdown concerns. The USD/JPY pair dropped sharply, reflecting a surge in demand for safe-haven assets.
With NFP data scheduled for release, traders are bracing for potential market shake-ups that could impact major currency pairs heading into the weekend.
GBP/USD
Technicals in Focus
The GBP/USD pair experienced sharp swings following the BoE rate decision, initially declining but later rebounding as traders reassessed the central bank’s stance. The lack of support for a rate hike and an increased number of votes in favor of a cut have weighed on the pound.
- Key Support Levels: 1.2400, 1.2370
- Key Resistance Levels: 1.2480, 1.2520
- Momentum Indicators: The MACD is showing bullish divergence, suggesting a recovery in momentum. The Stochastic Oscillator is exiting oversold conditions, pointing to further upside potential. The 14-day RSI hovers around 50, signaling a neutral stance.
Trading Strategy: Neutral to Buy
- Buy above 1.2440 with targets at 1.2480-1.2520 and a stop loss below 1.2400.
- Alternatively, sell below 1.2400 with targets at 1.2370-1.2340 and a stop loss above 1.2440.
USD/CAD
Technicals in Focus
The USD/CAD pair faced renewed downside pressure as Canada’s Ivey PMI came in at 47.1, below the 53.0 forecast, raising concerns about economic weakness. However, the pair managed to stabilize around the 1.4300 region, as traders positioned themselves ahead of the NFP report.
- Key Support Levels: 1.4280, 1.4250
- Key Resistance Levels: 1.4340, 1.4380
- Momentum Indicators: The MACD remains in bearish territory, signaling continued selling momentum. The Stochastic Oscillator is near oversold levels, hinting at a possible rebound. The 14-day RSI is neutral, reflecting market indecision.
Trading Strategy: Neutral to Sell
- Sell below 1.4300 with targets at 1.4280-1.4250 and a stop loss above 1.4340.
- Alternatively, buy above 1.4340 with targets at 1.4380-1.4420 and a stop loss below 1.4300.
USD/JPY
Technicals in Focus
The USD/JPY pair witnessed a sharp decline, as risk-off sentiment fueled demand for the Japanese yen. The recent drop below 152.00 reflects investor concerns over U.S. job market data and potential Federal Reserve policy shifts.
- Key Support Levels: 151.20, 150.80
- Key Resistance Levels: 151.80, 152.20
- Momentum Indicators: The MACD is deep in negative territory, confirming strong bearish momentum. The Stochastic Oscillator remains oversold, suggesting a short-term pullback could be possible. The 14-day RSI is at 35, indicating increasing downside pressure.
Trading Strategy: Neutral to Sell
- Sell below 151.50 with targets at 151.20-150.80 and a stop loss above 151.80.
- Alternatively, buy above 151.80 with targets at 152.20-152.60 and a stop loss below 151.50.
Market Outlook
Looking ahead, the U.S. Nonfarm Payrolls report will be the primary market mover, as traders assess the health of the U.S. labor market and its potential impact on Federal Reserve policy. A weaker-than-expected NFP print could lead to further dollar weakness, while a stronger figure may reignite rate hike speculation.
Additionally, the Bank of England’s dovish stance will continue to weigh on the British pound, while Canadian economic data remains under scrutiny following the disappointing Ivey PMI figures.
Overall, heightened volatility is expected, with traders closely watching central bank commentary and key economic data releases as they position themselves for the next market moves.