As we head into Monday, January 6, 2025, global markets are poised for heightened activity driven by significant U.S. economic data releases. Traders are focused on factory orders, PMI data, and upcoming Federal Reserve insights, as these events are expected to provide crucial guidance on the U.S. economic outlook and monetary policy trajectory.
In the currency markets, the EUR/USD pair faced consistent downward pressure due to weaker-than-expected Eurozone data and the resilience of the U.S. dollar. The GBP/USD pair mirrored this trend, as concerns over the U.K. economic outlook persisted. Meanwhile, the USD/CAD pair showed bullish tendencies, bolstered by stabilizing oil prices and a weaker Canadian dollar following mixed employment data.
EUR/USD
Technicals in Focus
The EUR/USD pair dropped sharply to 1.0230 during Friday’s session before recovering slightly to end near the 1.0300 level. The sell-off was fueled by disappointing Eurozone PMI data and the stronger U.S. dollar, supported by better-than-expected U.S. initial jobless claims. Technically, the MACD remains in bearish territory, with histograms showing strong downside momentum. The Stochastic Oscillator is hovering near oversold territory, and the 14-day RSI is firmly below 40, suggesting continued pressure on the euro.
Trading Strategy: Neutral to Sell
- Sell Levels: Below 1.0280-1.0250 with targets at 1.0220-1.0200 and 1.0150-1.0130.
- Buy Levels: Above 1.0320 with targets at 1.0350-1.0370, with stops below 1.0280.
GBP/USD
Technicals in Focus
The GBP/USD pair declined steadily, closing near 1.2415, as the U.K. grappled with weak domestic data and broad dollar strength. Investors remain cautious ahead of U.S. factory orders and Federal Reserve communications, which could further impact market sentiment. On the technical front, the MACD shows bearish momentum, while the Stochastic Oscillator is approaching oversold conditions. The 14-day RSI remains subdued, reflecting limited upside potential for the pound.
Trading Strategy: Neutral to Sell
- Sell Levels: Below 1.2400-1.2370 with targets at 1.2330-1.2300 and 1.2250-1.2220.
- Buy Levels: Above 1.2450 with targets at 1.2480-1.2500, with stops below 1.2400.
USD/CAD
Technicals in Focus
The USD/CAD pair surged during Friday’s session, closing near 1.4450 as oil prices remained range-bound and Canadian employment data came in weaker than expected. The pair continues to benefit from strong U.S. economic fundamentals. Technically, the MACD has turned bullish, with histograms above the zero line. The Stochastic Oscillator is rising, suggesting continued upside potential, while the 14-day RSI is nearing overbought levels, warranting caution for buyers.
Trading Strategy: Neutral to Buy
- Buy Levels: Above 1.4450-1.4480 with targets at 1.4520-1.4550 and 1.4600-1.4630.
- Sell Levels: Below 1.4400 with targets at 1.4350-1.4320, with stops above 1.4450.
Market Outlook
Looking ahead, U.S. factory orders for November and PMI readings for December will be critical in gauging the health of the U.S. manufacturing sector. Traders are also keeping a close watch on the 3-Year Note Auction for signals on market demand for U.S. Treasuries. Additionally, Federal Reserve communications throughout the week will shape expectations regarding monetary policy and interest rate movements.
The combination of key U.S. economic indicators and Fed commentary suggests potential volatility across currency markets. The euro and pound remain under pressure amid regional economic concerns, while the Canadian dollar’s performance will largely hinge on oil price dynamics and ongoing U.S. economic strength.