USD/JPY Rallies as Crude Oil Inventories Surge – 10 October 2024

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As we head into Thursday, October 10, 2024, global markets are positioned for another session that could experience heightened volatility, driven by crucial economic data releases. The U.S. dollar remains in focus as traders react to ongoing developments, particularly in light of the most recent crude oil inventory data and inflation reports. In addition, central bank communications, such as speeches from FOMC members, continue to shape expectations around U.S. monetary policy.

In the currency markets, the GBP/USD pair showed a mixed performance, largely impacted by weak U.K. economic data, particularly trade balance figures. The pair faces downside pressure, and traders will be watching for further guidance from upcoming U.K. data and Bank of England commentary.

Meanwhile, the USD/JPY pair exhibited strong bullish momentum, driven by demand for the U.S. dollar, despite lingering concerns around inflation and crude oil inventories data. The market continues to assess the balance between risk sentiment and economic data from both Japan and the U.S.

The NZD/USD pair remained under considerable pressure throughout the session, as weaker-than-expected New Zealand economic data weighed on the New Zealand dollar. Risk sentiment remains a dominant factor, and the market will closely monitor U.S. inflation data and global commodity prices for further direction.

GBP/USD

Technicals in Focus

The GBP/USD pair experienced a volatile session, dipping below the 1.3070 level as weak U.K. trade balance data dragged the pound lower. The pair has been unable to sustain any significant rally, with traders showing caution ahead of the Bank of England’s credit conditions survey.

On the technical front, the MACD indicator suggests increasing bearish momentum, with histograms expanding further below the zero line. The 14-day RSI remains neutral but is edging lower, indicating a potential for more downside action. The Stochastic Oscillator is also trending downward, suggesting that selling pressure could continue.

Trading Strategy: Neutral to Sell

Sell below 1.3070-1.3050 with targets at 1.3020-1.3000 and 1.2970-1.2950, with a stop loss above 1.3100. Alternatively, consider buying above 1.3100 with targets of 1.3140-1.3170, with stops below 1.3070.

USD/JPY

Technicals in Focus

The USD/JPY pair continued its upward trend, closing near the 149.34 level. This strong bullish momentum was driven by demand for the U.S. dollar amid the release of key inflation and crude oil inventories data.

On the technical side, the MACD indicator is in bullish territory, with histograms expanding above the zero line, confirming the uptrend. The 14-day RSI is approaching overbought levels, suggesting some caution might be warranted in the near term. The Stochastic Oscillator is also in overbought territory, but there is no clear indication of a reversal at this point.

Trading Strategy: Neutral to Buy

Buy above 149.00-148.70 with targets at 149.60-149.80 and 150.00-150.20, with a stop loss below 148.50. Alternatively, consider selling below 148.50 with targets of 148.20-147.80, with stops above 149.00.

NZD/USD

Technicals in Focus

The NZD/USD pair extended its losses, dropping below the 0.6060 level, as weak New Zealand economic data continued to weigh on the currency.

On the technical front, the MACD indicator remains firmly in bearish territory, with histograms showing sustained downward momentum. The 14-day RSI is hovering near oversold levels, suggesting that further downside could be limited in the short term. The Stochastic Oscillator is also in oversold territory, indicating that a potential corrective bounce may be on the horizon.

Trading Strategy: Neutral to Sell

Sell below 0.6060-0.6040 with targets at 0.6010-0.5990 and 0.5960-0.5940, with a stop loss above 0.6080. Alternatively, consider buying above 0.6080 with targets of 0.6120-0.6150, with stops below 0.6060.

Market Outlook

Looking ahead, traders will closely monitor U.S. CPI data and initial jobless claims, which could provide key insights into the U.S. economy’s health and future monetary policy direction. In the U.K., the Bank of England’s credit conditions survey will be in focus, as markets assess the central bank’s views on lending conditions and broader economic performance. For New Zealand, commodity prices and risk sentiment will continue to play a crucial role in the direction of the NZD/USD pair.

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 information.

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