As we head into Wednesday, February 26, 2025, global markets are bracing for heightened volatility following key U.S. economic data releases, including U.S. GDP growth figures and PCE inflation data. The U.S. dollar remains a focal point as traders react to recent indicators and prepare for upcoming Federal Reserve statements, with particular attention to inflationary trends and economic resilience.
In the currency markets, the EUR/USD pair has shown a choppy session, responding to mixed signals from both the Eurozone and the U.S. The euro remains under pressure amid growing concerns over economic stagnation in Europe, while investors weigh the impact of U.S. GDP growth on USD strength.
Meanwhile, USD/CAD surged, reflecting a stronger U.S. dollar and weaker Canadian GDP figures, which showed signs of slower growth. The pair also reacted to fluctuations in crude oil prices, as the energy market remains a crucial driver for CAD movements.
The AUD/USD pair exhibited notable volatility, reflecting the market’s sensitivity to risk sentiment and Australian economic data. Traders are closely watching the impact of upcoming U.S. macroeconomic reports, including the U.S. Initial Jobless Claims and GDP Price Index.
EUR/USD
Technicals in Focus
The EUR/USD pair traded with notable volatility, currently hovering near the 1.0504 level after recovering from earlier losses. The pair’s movements were largely influenced by U.S. PCE inflation data and GDP figures, both of which reinforced the dollar’s resilience.
- MACD Indicator: Shows signs of a potential bullish reversal as the histograms indicate declining bearish momentum.
- Stochastic Oscillator: In neutral territory, signaling indecision in the market.
- 14-Day RSI: Remains subdued, reflecting range-bound behavior.
Trading Strategy: Neutral to Sell
- Sell below 1.0490-1.0470, targeting 1.0440-1.0410, with a stop-loss above 1.0530.
- Alternatively, buy above 1.0530 with targets at 1.0560-1.0590, stopping below 1.0490.
USD/CAD
Technicals in Focus
The USD/CAD pair experienced a strong rally, currently trading around 1.4290. This surge was largely driven by weaker-than-expected Canadian GDP data and a rise in U.S. GDP, both of which pushed the pair to fresh highs.
- MACD Indicator: Displays strong bullish momentum, indicating further upside potential.
- Stochastic Oscillator: Approaching overbought levels, suggesting possible consolidation or pullback.
- 14-Day RSI: Trending higher, confirming bullish sentiment.
Trading Strategy: Neutral to Buy
- Buy above 1.4270-1.4290, targeting 1.4320-1.4350, with a stop-loss below 1.4250.
- Alternatively, sell below 1.4250 with targets at 1.4220-1.4190, stopping above 1.4280.
AUD/USD
Technicals in Focus
The AUD/USD pair remains volatile, currently trading near 0.6337 after bouncing off recent lows. The pair’s movement was influenced by weak risk sentiment, lower commodity prices, and anticipation of U.S. macroeconomic data.
- MACD Indicator: Near the zero line, indicating indecision.
- Stochastic Oscillator: Slightly oversold, suggesting potential for a short-term upside correction.
- 14-Day RSI: Neutral, reflecting consolidation.
Trading Strategy: Neutral to Sell
- Sell below 0.6320-0.6300, targeting 0.6270-0.6240, with a stop-loss above 0.6350.
- Alternatively, buy above 0.6350 with targets at 0.6380-0.6410, stopping below 0.6320.
Market Outlook
Looking ahead, U.S. GDP and labor market data will be key drivers in the forex market, particularly influencing USD strength across pairs. Additionally, Canada’s GDP miss has weighed on the CAD, potentially opening the door for further USD/CAD gains.
Traders will closely watch the ECB’s monetary policy statement and U.S. Initial Jobless Claims, which could shape market sentiment going into the next trading session. Overall, heightened volatility is expected, with the U.S. dollar poised to extend gains if economic data continues to support a strong outlook.