As we head into Friday, December 6, 2024, the forex markets remain highly volatile following a series of significant economic data releases from major economies. The U.S. nonfarm payrolls report, scheduled for release later today, is expected to dominate market sentiment as traders anticipate its impact on Federal Reserve policy. The Australian dollar gained some support from a robust trade balance, while the British pound rose on unexpectedly strong Halifax House Price Index figures. Meanwhile, the euro made strides ahead of upcoming Eurozone GDP data.
In the currency markets, the AUD/USD saw fluctuations driven by mixed market sentiment and trade data, while the GBP/USD extended its recovery after a strong rally earlier in the day. The EUR/USD pair also gained momentum, climbing from recent lows as traders digested a range of economic indicators.
EUR/USD
Technicals in Focus
The EUR/USD pair rebounded sharply, trading near 1.0570 after testing lows around 1.0510. The pair benefited from a weaker U.S. dollar as markets priced in softer ADP employment data earlier in the week. On the technical front, the MACD indicates bullish momentum, with histograms widening above the zero line. The Stochastic Oscillator has moved into overbought territory, signaling a potential short-term correction. The RSI remains moderately bullish, reflecting the ongoing recovery in the pair.
Trading Strategy: Neutral to Buy
- Buy above 1.0550-1.0570 with targets at 1.0600-1.0630 and stops below 1.0520.
- Alternatively, consider selling below 1.0510 with targets at 1.0480-1.0450 and stops above 1.0550.
GBP/USD
Technicals in Focus
The GBP/USD pair surged to trade near 1.2755 after an impressive rally fueled by strong Halifax House Price Index data (MoM: 0.3% vs. forecast 0.2%). Technical indicators suggest continued upward momentum, with the MACD above the zero line and widening histograms. The Stochastic Oscillator is approaching overbought levels, indicating possible consolidation. The RSI is hovering near 70, reflecting bullish market sentiment.
Trading Strategy: Neutral to Buy
- Buy above 1.2740-1.2760 with targets at 1.2800-1.2830 and stops below 1.2700.
- Alternatively, consider selling below 1.2700 with targets at 1.2670-1.2640 and stops above 1.2740.
AUD/USD
Technicals in Focus
The AUD/USD pair exhibited significant volatility, trading near 0.6440 following the release of strong Australian trade balance data (AUD 5.953B vs. forecast AUD 4.530B). Despite a sharp decline earlier in the session, the pair staged a recovery as risk appetite improved. The MACD is near the zero line, indicating mixed momentum. The Stochastic Oscillator is oversold, suggesting a potential rebound. The RSI remains neutral, reflecting cautious sentiment.
Trading Strategy: Neutral to Buy
- Buy above 0.6430-0.6450 with targets at 0.6480-0.6510 and stops below 0.6410.
- Alternatively, consider selling below 0.6410 with targets at 0.6380-0.6350 and stops above 0.6430.
Market Outlook
Looking ahead, the U.S. nonfarm payrolls report for November will be a critical determinant of market direction, particularly for the U.S. dollar. Strong employment figures could reignite expectations of further Federal Reserve tightening, while weaker data may increase dovish sentiment. In the UK, Halifax House Price Index gains will keep the pound supported, but Brexit concerns may limit further upside. Meanwhile, Australian trade data provided a short-term boost to the AUD, but its sustainability depends on global risk sentiment.
Overall, markets are expected to remain sensitive to economic data and central bank commentary, with potential for heightened volatility in the upcoming session.