As we head into Thursday, January 9, 2025, global markets are positioned for a session that could see heightened volatility, driven by critical U.S. labor market data and Canadian employment reports. The U.S. dollar remains the focal point as traders react to the ADP Nonfarm Employment Change, Initial Jobless Claims, and the upcoming Michigan Consumer Sentiment figures. These reports will offer key insights into the state of the U.S. economy and could set the tone for the forex market.
In the currency markets, the EUR/USD pair experienced a significant downward trend amidst risk-off sentiment, while USD/JPY and USD/CAD exhibited choppy sessions as traders positioned themselves ahead of Friday’s U.S. Nonfarm Payrolls (NFP) report.
EUR/USD
Technicals in Focus
The EUR/USD pair declined sharply, closing near the 1.0312 level, reflecting U.S. dollar strength bolstered by positive labor market data. The pair’s movement was driven by the better-than-expected ADP Nonfarm Employment Change, which came in at 122K, signaling resilience in the U.S. economy.
On the technical front, the pair continues to trend lower, with the MACD showing strong bearish momentum as histograms deepen in the negative zone. The Stochastic Oscillator is hovering in oversold territory, suggesting a potential corrective bounce in the short term. However, the 14-day RSI remains bearish, supporting a continuation of the downward trend.
Trading Strategy: Neutral to Sell
- Sell below 1.0330-1.0300, targeting 1.0270-1.0250 with stops above 1.0360.
- Alternatively, buy above 1.0360, targeting 1.0385-1.0410 with stops below 1.0320.
USD/JPY
Technicals in Focus
The USD/JPY pair saw a volatile session, closing near the 158.42 level after briefly testing higher resistance around 158.50. The pair reacted to the improving U.S. labor market outlook and hawkish sentiment surrounding Federal Reserve policy, with the 30-Year Bond Auction yielding 4.913%, further boosting the dollar.
The MACD remains slightly bullish, with histograms widening in the positive zone. The Stochastic Oscillator is in overbought territory, signaling caution for traders looking to initiate long positions. The 14-day RSI remains neutral, suggesting a consolidation phase.
Trading Strategy: Neutral to Buy
- Buy above 158.50-158.70, targeting 159.00-159.20 with stops below 158.20.
- Alternatively, sell below 158.20, targeting 157.80-157.50 with stops above 158.60.
USD/CAD
Technicals in Focus
The USD/CAD pair remained choppy, closing near the 1.4387 level as the Canadian dollar struggled against the greenback. The pair was influenced by mixed Canadian employment data, with Employment Change coming in at 24.5K, below the previous figure of 50.5K, and the unemployment rate holding steady at 6.8%.
On the technical side, the MACD is turning bullish, with histograms showing upward momentum. The Stochastic Oscillator is in neutral territory, while the 14-day RSI is leaning slightly positive, suggesting further upside potential for the pair.
Trading Strategy: Neutral to Buy
- Buy above 1.4400-1.4420, targeting 1.4450-1.4480 with stops below 1.4370.
- Alternatively, sell below 1.4370, targeting 1.4340-1.4320 with stops above 1.4400.
Market Outlook
Looking ahead, market participants will closely monitor Friday’s U.S. Nonfarm Payrolls (NFP) report, Average Hourly Earnings, and Canadian labor data for directional cues. The Michigan Consumer Sentiment figures scheduled for Thursday could provide additional volatility, particularly for USD crosses. With the U.S. labor market showing signs of resilience, traders should prepare for increased activity in the dollar index.
Key risks remain tied to the Federal Reserve’s monetary policy outlook, as any hawkish commentary could further strengthen the greenback. In Canada, oil price fluctuations and building permits data will also influence USD/CAD movements. Overall, the forex market is expected to remain volatile as traders react to new information and recalibrate their positions ahead of the weekend.