As we head into Monday, November 18, 2024, global markets prepare for another week of significant economic events, with traders closely monitoring key data releases and central bank speeches. The focus remains on the U.S. dollar, which continues to show strength as market participants digest the latest developments from the Federal Reserve and assess the economic outlook across major economies.
In the currency markets, the EUR/USD, GBP/USD, and USD/JPY pairs have exhibited notable volatility, influenced by economic data and shifting risk sentiment. As we look forward, all eyes will be on inflation data, central bank remarks, and geopolitical developments that could drive market movements.
EUR/USD
Technicals in Focus
The EUR/USD pair exhibited significant volatility last week, closing near 1.0538 after testing lower levels. This movement was influenced by mixed economic data from the Eurozone, including stagnant inflation figures and comments from European Central Bank (ECB) members.
On the technical front, the MACD indicator shows increasing bearish momentum, with histograms expanding below the zero line. The Stochastic Oscillator has entered oversold territory, suggesting potential for a corrective bounce. Meanwhile, the 14-day RSI remains weak, reflecting bearish sentiment.
Trading Strategy: Neutral to Sell
- Sell below 1.0540-1.0520, targeting 1.0500-1.0480 and 1.0450-1.0420, with a stop-loss above 1.0570.
- Alternatively, consider long positions above 1.0570, targeting 1.0600-1.0630, with a stop-loss below 1.0530.
GBP/USD
Technicals in Focus
The GBP/USD pair closed at 1.2617 after a week of sustained bearish pressure, driven by disappointing UK economic data, including lower-than-expected retail sales and industrial production figures.
On the technical side, the MACD has crossed below the zero line, indicating increasing bearish momentum. The Stochastic Oscillator is in oversold territory, suggesting that a short-term corrective rally could be in play. The 14-day RSI continues to reflect bearish conditions.
Trading Strategy: Neutral to Sell
- Sell below 1.2630-1.2600, targeting 1.2570-1.2550 and 1.2520-1.2500, with a stop-loss above 1.2660.
- Alternatively, buy above 1.2660, targeting 1.2690-1.2720, with a stop-loss below 1.2630.
USD/JPY
Technicals in Focus
The USD/JPY pair ended last week near 154.30 after a significant decline, largely influenced by profit-taking and increased demand for the yen amid renewed risk aversion. The pair continues to face bearish pressure, with the MACD showing expanding bearish histograms below the zero line. The Stochastic Oscillator is in oversold territory, hinting at a potential corrective bounce. However, the 14-day RSI indicates a strong bearish bias.
Trading Strategy: Neutral to Sell
- Sell below 154.50-154.30, targeting 154.00-153.80 and 153.50-153.30, with a stop-loss above 154.80.
- Alternatively, buy above 154.80, targeting 155.10-155.30, with a stop-loss below 154.50.
Market Outlook
Looking ahead, traders will focus on the following key events for potential volatility:
- Monday, November 18: ECB’s De Guindos and Lane are scheduled to speak, providing insights into the Eurozone’s monetary policy. Additionally, U.S. TIC long-term transactions data will offer clues about foreign investments in U.S. assets.
- Tuesday, November 19: Core CPI (YoY) from the Eurozone and U.K.’s Treasury Committee Hearings will be pivotal. U.S. building permits and housing starts will also be in focus.
- Wednesday, November 20: GBP CPI and Eurozone industrial data will likely drive movements in EUR/USD and GBP/USD.
- Thursday, November 21: Australian jobless claims and U.S. inflation data could add to market volatility.
Overall, global markets are expected to remain highly reactive to economic data and central bank communications. With major releases on the calendar, traders should prepare for heightened volatility as they position themselves for the week ahead.