As we head into Friday, February 21, 2025, global markets are set for another session of volatility, driven by key economic data releases. The U.S. dollar remains in focus following the latest FOMC Meeting Minutes, which provided further insight into the Federal Reserve’s policy stance. Weak U.S. economic data, including disappointing Philadelphia Fed Manufacturing Index and rising Initial Jobless Claims, weighed on the greenback. Meanwhile, commodity currencies like the Australian and New Zealand dollars gained strength amid a shift in risk sentiment.
USD/JPY
Technicals in Focus
The USD/JPY pair declined sharply throughout the session, falling to 149.48 before rebounding slightly towards 149.79. The downtrend was driven by a weaker U.S. dollar and renewed demand for safe-haven assets like the Japanese yen.
- MACD: Shows increasing bearish momentum, reinforcing the downward pressure.
- Stochastic Oscillator: Currently in oversold territory, suggesting potential for a short-term pullback.
- RSI (14-day): Bearish bias but stabilizing as the pair attempts a recovery.
Trading Strategy: Neutral to Sell
- Sell below 149.80-149.50, targeting 149.20-148.80, with stops above 150.00.
- Alternatively, buy above 150.00, targeting 150.30-150.60, with stops below 149.60.
AUD/USD
Technicals in Focus
The AUD/USD pair surged to a session high of 0.6403, reflecting strong bullish momentum. The rally was fueled by a broad sell-off in the U.S. dollar and improving risk sentiment.
- MACD: Strong bullish crossover, indicating continuation of the uptrend.
- Stochastic Oscillator: Near overbought territory, suggesting caution for buyers.
- RSI (14-day): Trending upwards, confirming positive momentum.
Trading Strategy: Neutral to Buy
- Buy above 0.6400-0.6380, targeting 0.6430-0.6450, with stops below 0.6360.
- Alternatively, sell below 0.6360, targeting 0.6330-0.6300, with stops above 0.6400.
NZD/USD
Technicals in Focus
The NZD/USD pair followed a similar trajectory to AUD/USD, rallying to 0.5766 as investors moved into higher-yielding assets. The pair gained momentum following weak U.S. economic data and a dovish Fed outlook.
- MACD: Strong bullish momentum, supporting further gains.
- Stochastic Oscillator: Overbought conditions suggest possible retracement.
- RSI (14-day): Bullish but approaching key resistance.
Trading Strategy: Neutral to Buy
- Buy above 0.5750-0.5730, targeting 0.5780-0.5800, with stops below 0.5710.
- Alternatively, sell below 0.5710, targeting 0.5680-0.5660, with stops above 0.5750.
Market Outlook
Looking ahead, the market’s focus will remain on U.S. economic data, particularly retail sales from the UK and Eurozone PMI reports, which could set the tone for broader risk sentiment. Additionally, traders will continue to analyze Fed speakers and the balance sheet update for further clues on monetary policy direction.
With commodity currencies gaining momentum and the U.S. dollar under pressure, expect continued volatility in major forex pairs as traders react to evolving macroeconomic developments.