As we head into Monday, October 28, 2024, the forex markets are positioned for another active session amid a series of crucial economic events lined up throughout the week. Traders will closely monitor U.S. economic data releases, speeches from key central bank officials, and developments in Europe and Canada, setting the tone for potential volatility in currency pairs.
In the currency markets, EUR/USD, USD/JPY, and USD/CAD are showing significant moves as markets react to mixed data across various regions, with the U.S. dollar remaining a focal point.
EUR/USD
Technicals in Focus
The EUR/USD pair witnessed considerable volatility in the previous session, starting strong before reversing gains sharply. The pair now trades near the 1.0795 mark, reflecting the market’s concerns about recent Eurozone CPI and GDP data. The upcoming GDP numbers from Europe will be critical in determining the next move.
- MACD: The MACD indicator is below the zero line, signaling bearish momentum.
- RSI: The 14-day RSI is neutral, hovering around 45, showing indecision.
- Stochastic Oscillator: In oversold territory, indicating the possibility of a short-term bounce.
Trading Strategy: Neutral to Sell
- Sell below 1.0790 with targets at 1.0750 and 1.0725; stop-loss above 1.0830.
- Alternatively, Buy above 1.0830 with targets at 1.0850 and 1.0880.
USD/JPY
Technicals in Focus
The USD/JPY pair displayed strength, climbing to 152.32 after a period of consolidation. The rise was driven by safe-haven flows into the dollar and volatility in the JPY amid Japan’s economic releases, including weaker-than-expected inflation figures.
- MACD: Above the zero line, indicating bullish momentum.
- RSI: Currently near 60, supporting upward momentum.
- Stochastic Oscillator: Approaching overbought territory, signaling caution for further long positions.
Trading Strategy: Neutral to Buy
- Buy above 152.30 with targets at 152.80 and 153.20; stop-loss below 151.80.
- Alternatively, Sell below 151.80 with targets at 151.40 and 151.00.
USD/CAD
Technicals in Focus
The USD/CAD pair rallied sharply, reaching 1.3890, driven by weak oil prices and Canada’s disappointing wholesale sales figures. The market will closely monitor Governor Macklem’s speeches for clues on future policy shifts and Canadian GDP figures due later in the week.
- MACD: Shows a bullish crossover, suggesting upward momentum.
- RSI: In bullish territory, currently around 65.
- Stochastic Oscillator: In overbought territory, indicating a potential pullback.
Trading Strategy: Neutral to Buy
- Buy above 1.3890 with targets at 1.3920 and 1.3950; stop-loss below 1.3850.
- Alternatively, Sell below 1.3850 with targets at 1.3800 and 1.3780.
Market Outlook
Looking ahead, market participants will keep a close eye on U.S. PCE Price Index data, GDP figures, and key speeches by Fed officials. The Eurozone’s GDP release and Canadian GDP will also play a pivotal role in setting the market’s tone. Oil prices continue to be a significant driver for USD/CAD, while risk sentiment will influence movements in USD/JPY.
Overall, the forex markets are expected to remain highly reactive to economic data and geopolitical developments, with potential for increased volatility. Traders should remain cautious, given the confluence of central bank events and major data releases throughout the week.