As we head into Monday, December 9, 2024, global markets are bracing for a week of critical economic data releases and central bank decisions. The U.S. dollar remains the center of attention as traders react to last week’s labor market data and look ahead to inflation expectations and central bank rhetoric. Meanwhile, other major currencies are positioning for significant volatility, driven by domestic data and geopolitical developments.
In the currency markets, the EUR/USD pair exhibited volatile movements, influenced by diverging economic indicators from the Eurozone and the United States. Similarly, the USD/JPY pair faced downward pressure, reflecting mixed market sentiment and central bank expectations. The GBP/USD saw a sharp decline towards the end of the session, impacted by weak U.K. economic data and a broadly stronger dollar.
EUR/USD
Technicals in Focus
The EUR/USD pair experienced choppy trading and closed near 1.0565 after testing both upside and downside levels throughout Friday’s session. The pair initially rallied following the release of softer-than-expected U.S. wage growth data but faced a sharp sell-off after U.S. Nonfarm Payrolls came in strong.
- MACD: The MACD histogram has shifted slightly into negative territory, suggesting bearish momentum.
- Stochastic Oscillator: This indicator is hovering in oversold territory, indicating a potential rebound in the short term.
- 14-day RSI: The RSI is near 45, reflecting a bearish bias but not yet oversold conditions.
Trading Strategy: Neutral to Sell
- Sell below 1.0570 with targets at 1.0530 and 1.0500, and a stop loss above 1.0600.
- Alternatively, Buy above 1.0600 with targets at 1.0630 and 1.0670, and stops below 1.0560.
USD/JPY
Technicals in Focus
The USD/JPY pair dropped to the 150.00 psychological support level after initially trading above 150.30. This decline was driven by a sharp risk-off sentiment in late Friday trading and concerns over potential interventions by the Bank of Japan (BoJ).
- MACD: The MACD has turned bearish, with the signal line crossing below the histogram.
- Stochastic Oscillator: The oscillator is firmly in oversold territory, hinting at a possible corrective bounce.
- 14-day RSI: The RSI hovers near 40, signaling bearish momentum with room for further declines.
Trading Strategy: Neutral to Buy
- Buy above 150.00 with targets at 150.50 and 151.00, and a stop loss below 149.70.
- Alternatively, Sell below 149.70 with targets at 149.30 and 148.80, and stops above 150.20.
GBP/USD
Technicals in Focus
The GBP/USD pair saw heightened volatility, ending the session near 1.2735 after failing to hold gains above 1.2800. Weak U.K. economic data, including a contraction in manufacturing production, weighed heavily on the pound, while dollar strength further pressured the pair.
- MACD: The MACD line is nearing the zero level, indicating waning bullish momentum.
- Stochastic Oscillator: The oscillator is in neutral territory, offering no clear directional bias.
- 14-day RSI: The RSI is at 48, signaling consolidation with a slightly bearish tilt.
Trading Strategy: Neutral to Sell
- Sell below 1.2740 with targets at 1.2700 and 1.2660, and a stop loss above 1.2780.
- Alternatively, Buy above 1.2780 with targets at 1.2815 and 1.2850, and stops below 1.2730.
Market Outlook
Looking ahead, traders will closely monitor the following key events:
- U.S. Inflation Data (Monday): The NY Fed’s 1-year consumer inflation expectations will offer insights into how inflationary pressures are perceived.
- RBA Rate Decision (Monday Night): The Reserve Bank of Australia’s interest rate announcement could have a significant impact on the Australian dollar and risk sentiment.
- U.S. CPI Data (Wednesday): This report will be a pivotal driver for dollar movements as markets assess the Fed’s likely stance ahead of its December meeting.
- ECB Rate Decision (Thursday): The European Central Bank’s policy outlook will determine near-term euro dynamics.
Overall, market participants should expect increased volatility as these critical events unfold. Traders are advised to maintain a cautious approach, with risk management strategies in place.