As we head into Monday, February 3, 2025, global markets are positioned for a session that could experience heightened volatility, driven by a series of significant economic data releases. The U.S. dollar remains the focal point as traders react to recent data and prepare for upcoming reports, particularly the U.S. ISM Manufacturing PMI, JOLTS Job Openings, and Factory Orders. Additionally, central bank commentary from key Federal Reserve officials will be closely monitored for any hints on future monetary policy adjustments.
In the currency markets, the GBP/USD, USD/CAD, and USD/JPY pairs reflected mixed sentiment influenced by macroeconomic events, fluctuating oil prices, and risk sentiment in global markets.
GBP/USD
Technicals in Focus
The GBP/USD pair experienced significant volatility, closing near the 1.2393 level after sharp swings influenced by U.S. economic data and positioning ahead of the upcoming Bank of England (BoE) Interest Rate Decision later in the week. The pair showed sharp declines after an initial attempt to rally.
- MACD Indicator: Bearish momentum with a crossover below the zero line, indicating increased selling pressure.
- Stochastic Oscillator: Currently in oversold territory, suggesting a potential for a corrective bounce.
- 14-day RSI: Hovering near 30, indicating oversold conditions which may trigger a short-term rebound.
Trading Strategy: Neutral to Sell
- Sell below 1.2400–1.2380 with targets at 1.2350–1.2320 and 1.2280–1.2260, with a stop loss above 1.2430.
- Alternatively, buy above 1.2430 with targets of 1.2460–1.2490, with stops below 1.2380.
USD/CAD
Technicals in Focus
The USD/CAD pair exhibited extreme volatility, closing near the 1.4537 level after significant price spikes driven by fluctuations in crude oil prices and Canadian economic data. The pair showed rapid reversals, reflecting the sensitivity to both U.S. and Canadian economic reports.
- MACD Indicator: Shows strong bullish momentum after a sharp rebound, suggesting potential for continued upside.
- Stochastic Oscillator: In overbought territory, indicating a possibility of a short-term pullback.
- 14-day RSI: Above 70, confirming overbought conditions which could lead to profit-taking.
Trading Strategy: Neutral to Buy
- Buy above 1.4540–1.4560 with targets at 1.4590–1.4620, with a stop loss below 1.4500.
- Alternatively, sell below 1.4500 with targets of 1.4470–1.4440, with stops above 1.4540.
USD/JPY
Technicals in Focus
The USD/JPY pair showed strong bullish momentum, closing near the 155.18 level after a consistent upward trend supported by risk-on sentiment and U.S. economic resilience. The pair has been rising steadily, reflecting strengthening demand for the U.S. dollar.
- MACD Indicator: Strong bullish crossover above the zero line, indicating continued upside momentum.
- Stochastic Oscillator: Near overbought territory, suggesting caution for potential pullbacks.
- 14-day RSI: Around 70, reflecting strong bullish conditions but also nearing overbought levels.
Trading Strategy: Neutral to Buy
- Buy above 155.20–155.40 with targets at 155.70–156.00, with a stop loss below 154.80.
- Alternatively, sell below 154.80 with targets of 154.50–154.20, with stops above 155.20.
Market Outlook
Looking ahead, traders will closely monitor key U.S. economic indicators, including the ISM Manufacturing PMI, JOLTS Job Openings, and Factory Orders. These data points will provide valuable insights into the strength of the U.S. economy and potential shifts in Federal Reserve policy.
Additionally, the OPEC meeting will be critical for oil-related currencies like the Canadian dollar, while the 10-Year Japanese Government Bond Auction could influence the yen. The Bank of England’s upcoming interest rate decision will also be in focus, potentially adding to the volatility in GBP pairs.
Overall, the market is expected to remain sensitive to economic data and central bank communications, with potential for increased volatility as traders react to new developments.