As we head into Thursday, December 19, 2024, global markets brace for significant volatility, driven by central bank policy updates and key U.S. economic data.
The Bank of Japan (BoJ) maintained its policy stance, keeping interest rates steady at 0.25%, leading to weakness in the yen amid cautious remarks in the BoJ press conference. In the U.S., jobless claims and GDP data will take center stage, likely dictating the dollar’s near-term direction.
In the currency markets, the USD/JPY, GBP/USD, and USD/CAD pairs exhibited notable volatility as traders adjusted their positions ahead of Thursday’s Bank of England (BoE) rate decision and critical U.S. employment and inflation data.
USD/JPY
Technicals in Focus
The USD/JPY pair faced downward pressure, closing near 153.74 after an earlier attempt to breach the 154.00 level. The movement reflects the yen’s recovery amid BoJ policy developments.
- The MACD shows weakening bullish momentum, suggesting a shift toward bearish sentiment.
- The Stochastic Oscillator is in overbought territory, indicating room for further downside correction.
- The 14-day RSI hovers around neutral at 52, reflecting indecision among traders.
Trading Strategy: Neutral to Sell
- Sell below 153.70-153.50 with targets at 153.20-152.90 and 152.50-152.30, with a stop loss above 154.10.
- Alternatively, buy above 154.00 with targets at 154.40-154.70, with stops below 153.50.
GBP/USD
Technicals in Focus
The GBP/USD pair showed resilience, trading near 1.2707 following earlier volatility. The pound rebounded amid positive U.K. wage growth data and ahead of the BoE Interest Rate Decision, where rates are expected to remain steady at 4.75%.
- The MACD is approaching the zero line, indicating reduced bearish momentum.
- The Stochastic Oscillator is moving higher but remains neutral, signaling a possible continuation of the upward movement.
- The 14-day RSI sits at 55, suggesting mild bullish pressure.
Trading Strategy: Neutral to Buy
- Buy above 1.2710-1.2730 with targets at 1.2760-1.2780 and 1.2810, with a stop loss below 1.2680.
- Alternatively, sell below 1.2680 with targets at 1.2650-1.2630, with stops above 1.2710.
USD/CAD
Technicals in Focus
The USD/CAD pair climbed sharply, closing near 1.4330 as the U.S. dollar strengthened against the Canadian dollar amid mixed oil price movements and weaker Canadian economic data. Housing starts in Canada came in below expectations, adding pressure to the CAD.
- The MACD remains above the zero line, confirming bullish momentum.
- The Stochastic Oscillator is approaching overbought territory, suggesting a possible pause or pullback.
- The 14-day RSI is at 60, indicating continued bullish bias.
Trading Strategy: Neutral to Buy
- Buy above 1.4320-1.4340 with targets at 1.4370-1.4400 and 1.4430, with a stop loss below 1.4290.
- Alternatively, sell below 1.4290 with targets at 1.4260-1.4230, with stops above 1.4320.
Market Outlook
Looking ahead, U.S. economic releases, including Continuing Jobless Claims, GDP Price Index, and the Philadelphia Fed Manufacturing Index, will dictate market sentiment and the dollar’s trajectory. Traders are also eyeing the BoE’s rate decision, which will influence GBP movement amid mixed U.K. economic signals.
In Japan, markets will closely monitor any follow-up remarks from BoJ policymakers, as the yen remains highly sensitive to changes in policy tone. Meanwhile, Canadian dollar movements will depend on oil price fluctuations and broader risk sentiment.
Overall, heightened volatility is expected across major currency pairs as traders respond to central bank updates and key economic data releases.