As we head into Tuesday, January 21, 2025, global markets are poised for potential volatility as traders digest recent data and prepare for upcoming reports. The U.S. dollar remains at the center of attention, particularly with the Michigan Consumer Sentiment report and existing home sales data from the U.S., alongside critical updates on crude oil inventories later in the week. These events are expected to provide key insights into the strength of the U.S. economy and the trajectory of Federal Reserve policy.
In the currency markets, the GBP/USD pair exhibited notable movement, driven by labor market data out of the UK. The USD/JPY pair saw fluctuations as investors reacted to mixed signals from Japan’s economic indicators and the global risk sentiment. Meanwhile, NZD/USD and USD/CAD showed sensitivity to commodity price trends and domestic economic data.
GBP/USD

Technicals in Focus
The GBP/USD pair showed heightened volatility, reaching near the 1.2305 level. This movement followed the release of stronger-than-expected UK employment figures, including a 5.6% increase in the average earnings index, beating the 5.2% forecast. On the technical front, the MACD histogram is nearing the zero line, indicating neutral momentum. The Stochastic Oscillator remains in oversold territory, suggesting a potential for upward correction. The 14-day RSI is hovering near 50, reflecting indecision.
Trading Strategy: Neutral to Buy
Buy above 1.2300-1.2280 with targets at 1.2340-1.2370 and 1.2400-1.2430, with a stop loss below 1.2250. Alternatively, consider selling below 1.2250 with targets at 1.2210-1.2180, with stops above 1.2300.
USD/JPY

Technicals in Focus
The USD/JPY pair experienced fluctuations, closing near 155.75 after a sharp spike earlier in the session. Japan’s lower-than-expected industrial production figure of -2.2% provided some weakness to the yen. The MACD shows bearish momentum building, while the Stochastic Oscillator remains in neutral territory. The 14-day RSI is at 55, indicating slight bullish bias.
Trading Strategy: Neutral to Sell
Sell below 155.50-155.30 with targets at 155.00-154.80 and 154.50-154.30, with a stop loss above 156.00. Alternatively, consider buying above 156.00 with targets of 156.40-156.60, with stops below 155.50.
NZD/USD

Technicals in Focus
The NZD/USD pair displayed a strong recovery, closing near 0.5662 after a dip to 0.5630 earlier in the session. This movement followed weak electronic card retail sales data out of New Zealand and a rise in risk sentiment. On the technical side, the MACD is approaching the zero line, suggesting neutral momentum. The Stochastic Oscillator is in overbought territory, indicating caution for buyers. The 14-day RSI is at 60, showing bullish momentum.
Trading Strategy: Neutral to Buy
Buy above 0.5650-0.5630 with targets at 0.5680-0.5710 and 0.5740-0.5770, with a stop loss below 0.5600. Alternatively, consider selling below 0.5600 with targets at 0.5570-0.5540, with stops above 0.5630.
Market Outlook
Looking ahead, the Michigan Consumer Sentiment and 1-Year Inflation Expectations reports will be closely watched, as they are critical in gauging U.S. consumer confidence and inflationary pressures. Additionally, the U.S. crude oil inventories report could impact commodity-sensitive currencies like CAD and NZD. GBP/USD traders will focus on follow-up data regarding the UK’s economic strength, while USD/JPY may remain influenced by global risk sentiment.
Overall, the market is expected to stay reactive to economic data releases, with traders focusing on potential shifts in central bank policy direction amidst mixed global economic signals.