Daily Forex market analysis - graphical, wave and technical analysis online

With the current technical conditions, Chainlink has the potential to weaken down to its nearest support level today

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[Chainlink]

With the EMA position forming a Death Cross on the 30-minute chart, it indicates that sellers are still dominating, suggesting that Chainlink will continue its decline toward the nearest support level in the near term.

Key Levels

1. Resistance. 2 : 13.32951

2. Resistance. 1 : 12.67507

3. Pivot : 12.20532

4. Support. 1 : 11.55088

5. Support. 2 : 11.08113

Tactical Scenario:

Pressure Zone: If the price of Chainlink breaks down below 11.55088, it has the potential to continue its decline to 11.08113.

Momentum Extension Bias: If 11.08113 is broken, Chainlink may continue its decline down to 10.42669.

Invalidation Level / Bias Revision:

The downside bias is restrained if the price of Chainlink strengthens and breaks above 13.32951.

Technical Summary:

EMA(50) : 12.15794

EMA(200): 12.63296

RSI(14) : 59.08

Economic News Release Agenda:

Tonight from the United States, several economic data releases will be as follows:

US - Existing Home Sales - 22:00 WIB

US - Revised UoM Consumer Sentiment - 22:00 WIB

US - Revised UoM Inflation Expectations - 22:00 WIB

The material has been provided by InstaForex Company - www.instaforex.com.

It seems that Bitcoin will continue its decline toward its nearest support level today

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[Bitcoin]

With the technical conditions indicating weakness in Bitcoin, then the potential for a decline which will occur in the near term is quite significant.

Key Levels

1. Resistance. 2 : 91545.30

2. Resistance. 1 : 88568.39

3. Pivot : 86518.22

4. Support. 1 : 83559.31

5. Support. 2 : 81491.14

Tactical Scenario:

Pressure Zone: If the price of Bitcoin breaks down below 86,518.22, it may continue its decline to 83,559.31.

Momentum Extension Bias: If 83,559.31 is broken, there is a possibility that Bitcoin will continue to decline to 81,491.14.

Invalidation Level / Bias Revision:

The downside bias is restrained if the price of Bitcoin strengthens and breaks above 91,545.30.

Technical Summary:

EMA(50) : 86363.09

EMA(200): 87282.03

RSI(14) : 59.70

Economic News Release Agenda:

Tonight from the United States, several economic data releases will be as follows:

US - Existing Home Sales - 22:00 WIB

US - Revised UoM Consumer Sentiment - 22:00 WIB

US - Revised UoM Inflation Expectations - 22:00 WIB

The material has been provided by InstaForex Company - www.instaforex.com.

What to Pay Attention to on December 19? Analysis of Fundamental Events for Beginners

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Analysis of Macroeconomic Reports:

Several macroeconomic reports are scheduled for Friday, but none of them are particularly significant. It should be noted that yesterday saw meetings of the Bank of England and the European Central Bank, along with the release of U.S. inflation data. These three important events did not provoke any substantial volatility or trending movements. Therefore, today's consumer confidence index in Germany, retail sales in the UK, and new home sales in the U.S. are unlikely to elicit a noticeable market reaction. In our opinion, the most interesting item appears to be the consumer sentiment index from the University of Michigan in the U.S.

Analysis of Fundamental Events:

A few fundamental events are scheduled for Friday. The only notable event is a speech by the ECB's Chief Economist, Philip Lane, but the market currently has no questions for the ECB. Questions do exist regarding the Federal Reserve and the BoE. Both central banks are likely to continue easing monetary policy next year, but the questions focus on the timing and scale of those actions, as well as the dynamics between the pound and the dollar in light of the declining key rates of both the BoE and the Fed.

General Conclusions:

During the last trading day of the week, both currency pairs are expected to trade more on technical factors than on macroeconomic influences. The EUR/USD pair will likely continue to trade near the 1.1745-1.1754 area, where new trading signals should be sought. The GBP/USD pair is entirely flat, so trading should occur only at the boundaries of the sideways channel of 1.3319-1.3446. Volatility is unlikely to be high today.

Key Rules of the Trading System:

1. The strength of a signal is assessed by the time it takes to form the signal (bounce or breakout). The less time it takes, the stronger the signal.
2. If two or more trades were opened near any level based on false signals, all subsequent signals from that level should be ignored.
3. In a flat, any pair can create numerous false signals or none at all. In any case, it's better to stop trading at the first signs of a flat.
4. Trades are opened during the period between the start of the European session and the middle of the American session, after which all trades must be closed manually.
5. On the hourly timeframe, when trading based on signals from the MACD indicator, it is preferable to trade only when good volatility is present, and a trend is confirmed by a trend line or channel.
6. If two levels are positioned too closely to each other (5 to 20 points), they should be viewed as a support or resistance area.
7. After moving 20 pips in the right direction, set the Stop Loss to breakeven.

Chart Explanation:

• Support and Resistance Levels: Levels that serve as targets for opening buys or sells. Take Profit levels can be placed near them.
• Red Lines: Channels or trend lines that reflect the current trend and indicate the preferred direction for trading.
• MACD Indicator (14, 22, 3): A histogram and signal line, a supplementary indicator that can also be used as a source of signals.

Important Note: Significant speeches and reports (always included in the news calendar) can greatly influence the movement of the currency pair. Therefore, during their release, it is advisable to trade cautiously or exit the market to avoid sharp reversals against the preceding movement.

Remember: For beginners trading in the Forex market, it is important to understand that not every trade can be profitable. Developing a clear strategy and practicing money management are keys to long-term trading success.

The material has been provided by InstaForex Company - www.instaforex.com.

How to Trade the GBP/USD Currency Pair on December 19? Simple Tips and Trade Analysis for Beginners

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Trade Analysis for Thursday:

1H Chart of the GBP/USD Pair

The GBP/USD pair traded mixed on Thursday, reflecting a mixed fundamental backdrop. It was a complex day, especially for novice traders. The difficulty lay in interpreting all the information received. For instance, the Bank of England lowered the key interest rate, prompting many to expect a decline in the British currency. However, the market had already anticipated monetary policy easing since Wednesday, when the UK inflation report was published. Inflation sharply declined, opening the door for the BoE to lower the key rate. Therefore, it can be said that this decision was priced in beforehand.

At the same time, U.S. inflation also fell sharply in November, surprising the market but opening the door for the Federal Reserve to further lower the key rate. Hence, the sharp decline in the dollar throughout the day was expected, yet the GBP/USD pair unexpectedly found itself within the sideways channel of 1.3331-1.3437 and could not break out of it. By the end of the day, neither the dollar nor the pound showed growth, although the US currency could have fallen by 100-150 pips. We remind novice traders once again that after significant global events, it is often best to wait for the market to settle.

5M Chart of the GBP/USD Pair

On the 5-minute time frame, one sell trading signal was formed during the day in the area of 1.3437-1.3446, but we did not highlight these levels for trading yesterday. These are the updated levels based on the new sideways channel. Overall, opening trades during or immediately after the results of the European Central Bank and BoE meetings was quite risky. Alongside this, the U.S. inflation report was also released.

How to Trade on Friday:

On the hourly time frame, the GBP/USD pair could enter a downward correction, as the trendline has been broken. However, a flat market has formed over the past 1.5 weeks. As mentioned earlier, there are no global factors driving medium-term dollar growth, so we expect movement only to the upside. We also anticipate a resumption of the global upward trend in 2025, which could lead the pair to the 1.4000 mark in the coming months.

On Friday, novice traders may consider opening new long positions if the price bounces from the 1.3319-1.3331 area or breaks above the 1.3437-1.3446 region. A bounce from the 1.3437-1.3446 range or a consolidation below 1.3319-1.3331 would make shorts relevant.

On the 5-minute time frame, trading can currently be considered at levels 1.2913, 1.2980-1.2993, 1.3043, 1.3096-1.3107, 1.3203-1.3212, 1.3259-1.3267, 1.3319-1.3331, 1.3437-1.3446, 1.3529-1.3543, and 1.3574-1.3590. On Friday, a retail sales report is scheduled for release in the UK, while in the U.S., the University of Michigan consumer sentiment index will be released. Neither report is the most significant, and the British pound is currently flat.

Key Rules of the Trading System:

1. The strength of a signal is assessed by the time it takes to form the signal (bounce or breakout). The less time it takes, the stronger the signal.
2. If two or more trades were opened near any level based on false signals, all subsequent signals from that level should be ignored.
3. In a flat, any pair can create numerous false signals or none at all. In any case, it's better to stop trading at the first signs of a flat.
4. Trades are opened during the period between the start of the European session and the middle of the American session, after which all trades must be closed manually.
5. On the hourly timeframe, when trading based on signals from the MACD indicator, it is preferable to trade only when good volatility is present, and a trend is confirmed by a trend line or channel.
6. If two levels are positioned too closely to each other (5 to 20 points), they should be viewed as a support or resistance area.
7. After moving 20 pips in the right direction, set the Stop Loss to breakeven.

Chart Explanation:

• Support and Resistance Levels: Levels that serve as targets for opening buys or sells. Take Profit levels can be placed near them.
• Red Lines: Channels or trend lines that reflect the current trend and indicate the preferred direction for trading.
• MACD Indicator (14, 22, 3): A histogram and signal line, a supplementary indicator that can also be used as a source of signals.

Important Note: Significant speeches and reports (always included in the news calendar) can greatly influence the movement of the currency pair. Therefore, during their release, it is advisable to trade cautiously or exit the market to avoid sharp reversals against the preceding movement.

Remember: For beginners trading in the Forex market, it is important to understand that not every trade can be profitable. Developing a clear strategy and practicing money management are keys to long-term trading success.

The material has been provided by InstaForex Company - www.instaforex.com.

How to Trade the EUR/USD Currency Pair on December 19? Simple Tips and Trade Analysis for Beginners

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Trade Analysis for Thursday:

1H Chart of the EUR/USD Pair

The EUR/USD currency pair moved in various directions on Thursday, but it was not particularly volatile. Overall, this week has been more disappointing than rewarding, in many respects. First, the market movements leave much to be desired. Many traders likely expected to see a trend and high volatility, but what they got instead was more of a flat market. Secondly, the macroeconomic background clarified some issues but failed to answer key questions. Notably, this week saw the release of the long-awaited reports on U.S. unemployment and the labor market, as well as an inflation report. Inflation has started to slow, but questions remain about the labor market, as unemployment continues to rise while Non-Farm Payrolls are beginning to show signs of recovery. We believe it is essential to base decisions on the overall picture. In our view, the global fundamental backdrop has not changed this week, so we expect further dollar declines. Any growth in the US currency will be perceived as a correction. This does not mean that short positions are prohibited; rather, a rise in the EUR/USD pair remains far more likely.

5M Chart of the EUR/USD Pair

On the 5-minute time frame, the pair traded sideways throughout Thursday, bouncing three times between 1.1745 and 1.1754. In each of these three instances, the price fell by approximately 20-25 pips. The overall volatility for the day was around 50 pips, despite two central bank meetings and a crucial U.S. inflation report.

How to Trade on Friday:

On the hourly time frame, the EUR/USD pair continues to form an upward trend. The fundamental and macroeconomic background remains very weak for the U.S. dollar, suggesting further gains for the pair. The price has reached the upper line of the sideways channel at 1.1400-1.1830, so it now needs either to break through it, or the flat trend will persist.

On Friday, novice traders can once again trade from the area of 1.1745-1.1754. A bounce from this area will allow for the opening of short positions with a target at 1.1655-1.1666. A consolidation above this area would suggest long positions with a target at 1.1808.

On the 5-minute time frame, levels to consider include 1.1354-1.1363, 1.1413, 1.1455-1.1474, 1.1527-1.1531, 1.1550, 1.1584-1.1591, 1.1655-1.1666, 1.1745-1.1754, 1.1808, 1.1851, 1.1908, and 1.1970-1.1988. There are no significant events scheduled in the Eurozone on Friday, while in the U.S., the University of Michigan consumer sentiment index will be released. Yesterday, the volatility during three much more important events was just 50 pips. What to expect today? That's a rhetorical question.

Key Rules of the Trading System:

1. The strength of a signal is determined by the time it takes to form the signal (bounce or breakout). The less time required, the stronger the signal.
2. If two or more trades were opened near any level based on false signals, all subsequent signals from that level should be ignored.
3. In a flat, any pair may form numerous false signals or none at all. At the first signs of a flat, it is better to stop trading.
4. Trades are opened during the period between the beginning of the European session and the middle of the American session, after which all trades should be closed manually.
5. On the hourly timeframe, it is preferred to trade only when there is good volatility and a trend confirmed by the trend line or channel, using signals from the MACD indicator.
6. If two levels are too close to each other (5 to 20 pips), they should be viewed as a support or resistance area.
7. Upon moving 15 pips in the right direction, set the Stop Loss to breakeven.

Chart Explanations:

• Support and Resistance Levels: Levels that serve as targets for opening buys or sells. Take Profit levels can be placed near them.
• Red Lines: Channels or trend lines that reflect the current trend and indicate the preferred direction for trading.
• MACD Indicator (14, 22, 3): A histogram and signal line; a supplementary indicator that can also be used as a source of signals.

Important Note: Significant speeches and reports (always included in the news calendar) can greatly influence the movement of the currency pair. Therefore, during their release, it is advisable to trade cautiously or exit the market to avoid sharp reversals against the preceding movement.

Remember: For beginners trading in the Forex market, it is important to understand that not every trade can be profitable. Developing a clear strategy and practicing money management are keys to long-term trading success.

The material has been provided by InstaForex Company - www.instaforex.com.

GBP/USD Overview. December 19. The Bank of England Implemented Another Easing

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The GBP/USD currency pair has been trading more actively than the EUR/USD over the past two days. However, it has not shown any particularly interesting movements, which can be seen across almost any time frame. Most traders were likely hoping for more volatile, trend-driven movements this week, but objective reality has dashed those hopes once again. Nevertheless, several important points should not be overlooked and offer an optimistic outlook for the future.

For us, optimism now comes from the realization of the forecast we have been discussing throughout 2025. We believe nothing has fundamentally changed for the U.S. dollar globally over the past six months. Therefore, we continue to expect only its decline. This week, the British pound faced selling pressure twice but lost only a minor amount. First, inflation came in significantly below expectations, and then the Bank of England, as expected, lowered its key interest rate. However, let us examine these two events in detail and determine whether a collapse of the British currency was warranted.

Inflation has decreased, giving the Bank of England the "green light" to ease monetary policy. Essentially, these two events can be combined into one. However, most experts were already confident in a cut to the BoE's key interest rate even before the inflation report was published. At the last meeting of the British central bank, four of the nine Monetary Policy Committee members voted for an easing of policy, with inflation at 3.6%. Thus, the BoE was already mentally prepared for a reduction. The market was waiting for this decision, and since it was waiting, it had priced it in advance. Therefore, neither the inflation report nor the BoE's meeting should have provoked a significant decline in the British currency.

The GBP/USD pair stayed near its local highs, and on the daily time frame, we see that a classic three-wave correction has formed in recent months. We want to remind you that such a correction should not have occurred at all, as the last leg of the pair's decline was completely illogical. The market reacted around 10 times to confusion over the British budget for 2026, and during Rachel Reeves's speeches, the pound was sold even when the UK's Chancellor mentioned healthcare issues.

The market also deemed it unnecessary to react to two rounds of Federal Reserve monetary policy easing or the US "shutdown." Consequently, in early November, the British pound was too oversold, and the dollar was overbought. This occurred within the upward trend of 2025. Thus, we continue to believe that the trend persists, the global fundamental background has not changed, and Trump, meanwhile, is planning to start a full-scale war with Venezuela. The peacemaker president was unable to resolve the conflict in Ukraine in an entire year, and even other conflicts that "Trump resolved" flare up from time to time with renewed vigor. The dollar remains in a challenging position.

The average volatility of the GBP/USD pair over the last five trading days is 86 pips. For the pound/dollar pair, this value is considered "average." On Friday, December 19, we thus expect movement within a range of 1.3306 to 1.3477. The upper channel of the linear regression is directed downward, but only due to a technical correction on higher time frames. The CCI indicator entered the oversold zone six times over the last few months and formed several "bullish" divergences, which constantly warned of a resumption of the upward trend. Last week, the indicator formed another bullish divergence, but the week concluded with two entries into the overbought area and two "bearish" divergences. Conclusion: correction within the upward trend.

Nearest Support Levels:

S1 – 1.3367

S2 – 1.3306

S3 – 1.3245

Nearest Resistance Levels:

R1 – 1.3428

R2 – 1.3489

R3 – 1.3550

Trading Recommendations:

The GBP/USD currency pair is attempting to resume the upward trend of 2025, and its long-term prospects remain unchanged. Donald Trump's policies will continue to exert pressure on the dollar, so we do not expect the US currency to appreciate. Thus, long positions with targets of 1.3489 and 1.3550 remain relevant in the near term, provided that the price is above the moving average. If the price is below the moving average line, small short positions with targets of 1.3306 and 1.3245 may be considered on technical grounds. From time to time, the US currency shows corrections (in the global context), but for a trend strengthening, it needs signs of the end of the trade war or other global positive factors.

Explanations for Illustrations:

• Support and resistance price levels are marked by thick red lines, where movement may conclude. They are not sources of trading signals.
• The Kijun-sen and Senkou Span B lines are Ichimoku indicator lines transferred to the hourly timeframe from the 4-hour timeframe. They are strong lines.
• Extremum levels are marked by thin red lines, where the price previously bounced. They are sources of trading signals.
• Yellow lines represent trend lines, trend channels, and any other technical patterns.
• Indicator 1 on the COT charts shows the size of the net position of each category of traders.

The material has been provided by InstaForex Company - www.instaforex.com.

EUR/USD Overview. December 19. The ECB Did Not Surprise the Market, Nor Should It Have

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The EUR/USD currency pair traded with relatively low volatility on Thursday. Overall, this week can be summarized as follows: expectations were not met. We anticipated that the strong fundamental and macroeconomic backdrop, important reports, and global events would lead the pair out of its six-month flat trend. However, that did not occur. There weren't even any interesting movements, trend shifts, or reinforcement of the current trends. The most significant events elicited emotional spikes in the market, but as seen in the illustration above, the pair is trading roughly where it began this week. Thus, it has been a continuous disappointment.

The European Central Bank meeting had the least chance of moving the market off its "dead center." Recall that the monetary policy of nearly all central banks around the world (at least the largest ones) in recent years has been tied to inflation. The ECB is one of the few central banks that has succeeded in slowing inflation down to 2%. Thus, it was the first of the "big three" (ECB, Bank of England, and Federal Reserve) to lower the key rate to a "neutral level" and is now reaping the rewards of its actions. Therefore, yesterday's meeting was somewhat "bland," and Christine Lagarde did not make any statements the market could not ignore. We saw another formal emotional spike, but nothing more.

On the other hand, it is actually very good that the pair remained roughly at the same levels as before this block of super-important events. If the dollar had started to rise again, it would definitely mean the continuation of the flat trend for several more months. If the pair showed a substantial increase, that would be justified, but strong movements during important events always carry unstable prospects. Recall that very often after Fed meetings, the price rockets in one direction and then returns to its starting position. Global fundamental events are more important for determining a long-term trend than for short-term trading.

Thus, the euro now faces the task of overcoming the 1.1800-1.1830 area, which can be considered the upper limit of the sideways channel on the daily timeframe. When/if this happens, the euro's growth will reasonably continue, as the fundamental and macroeconomic conditions support not the dollar but the euro. Over the past six months, bears have failed to form a trend. The U.S. labor market remains unsatisfactory, and from May next year the Fed's key rate could drop rapidly, even without any economic justification. The Fed may lose its independence, and it could be led by Donald Trump. Meanwhile, the Eurozone remains relatively stable, and the euro does not dominate the current situation. The dollar pulls the strings.

The average volatility of the EUR/USD pair over the last five trading days as of December 19 is 50 pips, which is considered "average." We expect the pair to trade between 1.1682 and 1.1782 on Friday. The upper linear regression channel is directed downward, signaling a bearish trend, but the flat trend continues on the daily timeframe. The CCI indicator entered oversold territory twice in October (!!!) but visited the overbought area last week. A downward retracement is possible.

Nearby Support Levels:

• S1 – 1.1719
• S2 – 1.1658
• S3 – 1.1597

Nearby Resistance Levels:

• R1 – 1.1780
• R2 – 1.1841

Trading Recommendations:

The EUR/USD pair is above the moving average line, maintaining an upward trend across all higher timeframes, while the daily timeframe has been flat for several months. The global fundamental backdrop remains an essential factor for the market, and it remains negative for the dollar. In the past six months, the dollar has shown weak growth only sporadically, but exclusively within the sideways channel. It has no fundamental basis for long-term strengthening. If the price is below the moving average, small short positions can be considered, with targets at 1.1658 and 1.1597, based solely on technical grounds. Above the moving average line, long positions remain relevant with targets at 1.1780 and 1.1830 (the upper line of the flat on the daily timeframe), which have essentially already been reached. Now, we need the flat to conclude.

Explanations for Illustrations:

• Support and resistance price levels are marked by thick red lines, where movement may conclude. They are not sources of trading signals.
• The Kijun-sen and Senkou Span B lines are Ichimoku indicator lines transferred to the hourly timeframe from the 4-hour timeframe. They are strong lines.
• Extremum levels are marked by thin red lines, where the price previously bounced. They are sources of trading signals.
• Yellow lines represent trend lines, trend channels, and any other technical patterns.
• Indicator 1 on the COT charts shows the size of the net position of each category of traders.

The material has been provided by InstaForex Company - www.instaforex.com.

Trading Recommendations and Analysis of GBP/USD on December 19. The Market Was Not Intimidated by the Bank of England's Rate

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Analysis of GBP/USD 5M

The GBP/USD currency pair began Thursday in decline, but after the Bank of England's meeting and its decision to lower the key interest rate by 0.25%, the British pound shifted into an upward trend. Illogical? At first glance, yes. However, the market had already understood the British central bank's intentions following the November inflation report. It became clear at that time that a new round of monetary policy easing would follow. Thus, this decision had been priced in "in advance," and we can say the same as we often do after almost every central bank meeting—do not rush to conclusions. It is essential to give the market time to settle and process the information before drawing conclusions. The pound rose on the entirely "dovish" decision of the Bank of England, but had already returned to its initial positions by the evening. Classic.

From a technical perspective, surprisingly, a flat market has formed for the British currency. This flat trend has been ongoing for over a week. The price is stuck between 1.3307 and 1.3437, and the super-important macroeconomic and fundamental backdrop this week has had no impact on this situation. It is fair to note that many reports and events contradicted each other. British data did not support the pound, but neither did the U.S. data support the dollar.

On the 5-minute time frame yesterday, three trading signals were formed, two of which could have brought decent profits. During the European trading session, the pair bounced from the area of 1.3369-1.3377 but could only move down by 20-25 pips. Then, the price consolidated above this area, followed by a test of 1.3437, a bounce, and a return to the 1.3369-1.3377 area. Thus, the last two trades were profitable, while the first was closed at breakeven with a Stop Loss.

COT Report

COT reports for the British pound show that commercial traders' sentiment has been changing constantly in recent years. The red and blue lines, representing net positions of commercial and non-commercial traders, frequently intersect and are usually close to the zero mark. Currently, they are almost at the same level, indicating a roughly equal number of long and short positions.

The dollar continues to decline due to Donald Trump's policies, as shown in the weekly time frame (illustration above). The trade war will continue in one form or another for a long time. The Federal Reserve will lower its rate within the next 12 months regardless. Demand for the dollar will decline in any case. According to the most recent COT report (dated October 28) regarding the British pound, the "Non-commercial" group opened 7,000 BUY contracts and 10,500 SELL contracts. Consequently, the net position of non-commercial traders decreased by 3,500 contracts over the week. However, this data is already outdated, and there are no fresh updates.

In 2025, the pound has risen significantly, but it is important to understand that the reason is one: Trump's policies. Once this reason is mitigated, the dollar may begin to rise, but when that will happen is unknown. It does not matter how the net position of the pound grows or declines (if it declines). The net position of the dollar, in any case, is falling, and it is generally doing so at a faster pace.

Analysis of GBP/USD 1H

On the hourly time frame, the GBP/USD pair continues to form an upward trend despite the breakout of the trend line. We believe that growth will continue in the medium term, regardless of the local macroeconomic and fundamental background. Recently, a flat trend has formed, so further movement will be determined once the price breaks out of the sideways channel.

For December 19, we highlight the following important levels: 1.2863, 1.2981-1.2987, 1.3042-1.3050, 1.3096-1.3115, 1.3201-1.3212, 1.3307, 1.3369-1.3377, 1.3437, 1.3533-1.3548, 1.3584. The Senkou Span B line (1.3308) and the Kijun-sen line (1.3383) may also serve as signal sources. A Stop Loss is recommended to be set at breakeven when the price moves in the correct direction by 20 pips. The lines of the Ichimoku indicator may shift throughout the day, which should be taken into account when determining trading signals.

On Friday, a retail sales report will be published in the UK, while in the U.S., the University of Michigan consumer sentiment index is scheduled. This week, many more important events and releases failed to provoke a trending movement. Likely, Friday will bring dull trading.

Trading Recommendations:

Today, traders may consider selling if the price consolidates below the 1.3369-1.3377 area, with a target at 1.3307. Long positions will become relevant upon bouncing from the area of 1.3369-1.3377 or from the level of 1.3307, with a target at 1.3437.

Illustration Explanations:

Support and resistance price levels are indicated by thick red lines around which the movement may conclude. They are not sources of trading signals.

Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator, transferred to the hourly time frame from the 4-hour time frame. They are strong lines.

Extreme levels are thin red lines from which the price has previously bounced. They are sources of trading signals.

Yellow lines represent trend lines, trend channels, and any other technical patterns.

Indicator 1 on COT charts shows the size of each category of traders' net position.

The material has been provided by InstaForex Company - www.instaforex.com.

Trading Recommendations and Analysis of EUR/USD on December 19. Neither the ECB Meeting nor U.S. Inflation Changed Anything

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Analysis of EUR/USD 5M

The EUR/USD currency pair did not trade as expected on Thursday. There were at least three significant events scheduled for the day, each with the potential to impact either the euro or the dollar. In fact, all three had an impact, but the movements observed throughout the day more closely resembled a flat market than anything else. Essentially, only the U.S. inflation report warranted attention. The Consumer Price Index in the U.S. unexpectedly slowed to 2.7%, making it easy to suggest that the Federal Reserve may lower the key interest rate more than once in 2026. Thus, the dollar had every chance to decline significantly. However, it did not.

At the same time, the Bank of England predictably lowered the key interest rate by 0.25%, taking an expected but "borderline" decision. The European Central Bank made no decisions, so there was essentially no reaction to these two events. As anticipated, we saw volatility rise and emotions surge, but there were no interesting movements.

On the 5-minute time frame yesterday, two trading signals were formed. The price bounced twice from the area of 1.1748-1.1760 from below, provoking a relatively small decline. The price did not even come close to the nearest target area. This was clearly not the kind of movement traders were hoping for yesterday while checking the events calendar.

COT Report

The latest COT report was released last week and is dated November 18, so it is still outdated. The illustration above clearly shows that the net position of non-commercial traders has been "bullish" for a long time, with bears barely entering a zone of their own superiority at the end of 2024, only to quickly lose it. Since Trump took office as President of the United States for a second time, the dollar has been in decline. We cannot say with 100% certainty that the decline of the American currency will continue, but the current developments in the world suggest this outcome.

We still do not see any fundamental factors supporting the strengthening of the euro, while there are still enough factors supporting the decline of the American dollar. The global downward trend is still intact, but what matters now is where the price has moved over the past 17 years. The dollar may strengthen if the global fundamental picture changes, but there are currently no signs of that.

The position of the red and blue lines of the indicator continues to indicate the persistence of a bullish trend. Over the last reporting week, the number of longs in the "Non-commercial" group increased by 8,000, while the number of shorts decreased by 17,400. Consequently, the net position increased by 25,400 contracts over the week. However, this data remains outdated and holds no significance.

Analysis of EUR/USD 1H

On the hourly time frame, the EUR/USD pair maintains an upward trend within a complex macroeconomic week. In fact, the upper line of the sideways channel at 1.1400-1.1830 has been tested, so we may now observe a technical decline, as the flat pattern persists on the daily time frame. Essentially, we saw a reversal near the channel's upper boundary, suggesting a possible decline towards its lower boundary. However, we still believe that the upward movement will continue.

For December 19, we highlight the following levels for trading: 1.1234, 1.1274, 1.1362, 1.1426, 1.1542, 1.1604-1.1615, 1.1657-1.1666, 1.1750-1.1760, 1.1846-1.1857, 1.1922, 1.1971-1.1988, as well as the Senkou Span B line (1.1677) and the Kijun-sen line (1.1754). The lines of the Ichimoku indicator may shift throughout the day, which should be taken into account when determining trading signals. Do not forget to set a Stop Loss order at breakeven if the price moves in the correct direction by 15 pips. This will safeguard against potential losses if the signal turns out to be false.

On Friday, there are no interesting events scheduled in the Eurozone, while in the U.S., the only notable event is the University of Michigan consumer sentiment index, which is not a primary significance report. Volatility on the last trading day of the week may be even lower.

Trading Recommendations:

On Friday, traders may trade in the 1.1750-1.1760 range. A bounce in price from this area will again make short positions relevant, with a target at the Senkou Span B line. A consolidation above this area will lead to another attempt to break out of the sideways channel at 1.1400-1.1830 through the upper boundary. In this case, long positions will become relevant.

Illustration Explanations:

Support and resistance price levels are indicated by thick red lines around which the movement may conclude. They are not sources of trading signals.

Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator, transferred to the hourly time frame from the 4-hour time frame. They are strong lines.

Extreme levels are thin red lines from which the price has previously bounced. They are sources of trading signals.

Yellow lines represent trend lines, trend channels, and any other technical patterns.

Indicator 1 on COT charts shows the size of each category of traders' net position.

The material has been provided by InstaForex Company - www.instaforex.com.

Summary of the Bank of England Meeting

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On Thursday, the Bank of England held its last meeting of the year and made not just an expected decision, but a justified one. It is worth noting that some market participants were skeptical about the fourth round of monetary policy easing in 2026, but all doubts were dispelled after the inflation report was released on Wednesday. It turned out that core inflation slowed from 3.4% year-on-year to 3.2%, while headline inflation fell from 3.6% to 3.2%. Frankly, I did not expect inflation to decline so rapidly. Although it remains well short of the target mark, five consecutive months without acceleration are already a trend.

Thus, by Wednesday morning, it became clear that the BoE would adopt a positive decision for easing policy. However, in practice, for the second consecutive meeting, the decision was made with a narrow one-vote margin. This time, there were only four "hawks" and five "doves." Those voting for a rate cut included Swati Dhingra, Alan Taylor, Andrew Bailey, Sarah Breeden, and Dave Ramsden. It is noteworthy that the decisive vote came from BoE Governor Andrew Bailey, who also cast the deciding vote to maintain the interest rate a month and a half ago.

The Bank of England press release stated that inflation remains elevated but is falling faster than expected. Therefore, it could return to 2% more quickly. The central bank also acknowledged the weakening labor market, but easing monetary policy should positively reflect on its condition. The unemployment rate may rise for a few more months, but will then begin to fall.

During the press conference, Bailey did not make any promises regarding rate cuts in the next year, only stating that BoE decisions will depend on inflation forecasts. If the BoE anticipates further slowing of consumer prices, then the interest rate will also decrease over time.

From all the above, I believe that after this week, the situation has worsened not for the pound but for the dollar. The U.S. labor market remains weak, and the Fed may engage in more significant policy easing in 2026 than previously expected.

Wave Analysis for EUR/USD:

Based on the analysis, I conclude that the EUR/USD pair continues to build an upward trend segment. Donald Trump's policy and the Fed's monetary policy remain significant factors influencing the long-term decline of the American currency. The targets for the current segment of the trend may extend to the 25 figure. The current upward wave set is beginning to develop, and I hope we are witnessing the construction of an impulsive wave structure that is part of the global wave 5. In this scenario, we should expect growth to reach the 25 figure, as I mentioned earlier.

Wave Analysis for GBP/USD:

The wave structure of the GBP/USD pair has changed. We continue to deal with an upward, impulsive trend segment, but its internal wave structure has become more complex. The downward corrective structure a-b-c-d-e in C of 4 appears complete, as does the entire wave 4. If this is accurate, I expect the main trend to resume construction with initial targets around the 38 and 40 figures.

In the short term, I anticipated the formation of wave 3 or c with targets around 1.3280 and 1.3360, corresponding to the 76.4% and 61.8% Fibonacci retracement levels. These targets have been achieved. Wave 3 or c continues to build, and the current wave set is beginning to show impulsive characteristics. Therefore, we can expect continued upward pricing with targets around 1.3580 and 1.3630.

Key Principles of My Analysis:

1. Wave structures should be simple and understandable. Complex structures are difficult to trade and often undergo changes.
2. If you have no confidence in market trends, it is better not to enter the market.
3. There can never be 100% certainty regarding the direction of movement. Remember to use protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.

The material has been provided by InstaForex Company - www.instaforex.com.

Summary of the December ECB Meeting

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On December 18, the European Central Bank concluded its final meeting of the year, albeit a week later than the Federal Reserve. As expected by market participants, no significant decisions were made. All three interest rates (refinancing, deposit, and lending) remained unchanged for the fourth consecutive time. The ECB's accompanying statement emphasized the resilience of the European economy. The 2025 growth forecast was revised upward to 1.4% year-on-year. While such growth rates cannot be deemed high, they are stable, which the ECB likely finds satisfactory.

The statement also noted weaknesses in the manufacturing sector (particularly in Germany), while concurrently highlighting a strong labor market and robust domestic consumption. The eurozone economy has responded well to Donald Trump's trade war, with initial expectations of much worse outcomes from tariffs. Nevertheless, economic growth persists, inflation has been stabilized around 2%, and there are no imminent risks of it accelerating. The ECB continues to prioritize maintaining price stability.

The final communique indicated that the central bank will continue to monitor any changes in economic processes closely and is prepared to react if necessary. This means that if inflation deviates from 2% on a sustained basis, the ECB will be ready to tighten or ease monetary policy. One of the ECB's executives, Isabel Schnabel, previously highlighted the risks of high inflation over the risks of an economic slowdown. The market interpreted this statement as a signal that the ECB might consider raising interest rates next year. On the other hand, another ECB executive, Luis de Guindos, reminded that it is important not only to prevent a new rise in the consumer price index but also to avoid slowing down below the target mark. Thus, the ECB may also revert to easing.

From all this, it follows that the ECB does not need to change its monetary policy parameters in the coming months. Therefore, we do not expect changes, nor do we anticipate the ECB's decisions to significantly impact the euro's exchange rate. The EUR/USD instrument will likely be more influenced by U.S. news, particularly Fed decisions, in the coming months.

Wave Analysis for EUR/USD:

Based on the analysis, I conclude that the EUR/USD pair continues to build an upward trend segment. Donald Trump's policy and the Fed's monetary policy remain significant factors influencing the long-term decline of the American currency. The targets for the current segment of the trend may extend to the 25 figure. The current upward wave set is beginning to develop, and I hope we are witnessing the construction of an impulsive wave structure that is part of the global wave 5. In this scenario, we should expect growth to reach the 25 figure, as I mentioned earlier.

Wave Analysis for GBP/USD:

The wave structure of the GBP/USD pair has changed. We continue to deal with an upward, impulsive trend segment, but its internal wave structure has become more complex. The downward corrective structure a-b-c-d-e in C of 4 appears complete, as does the entire wave 4. If this is accurate, I expect the main trend to resume construction with initial targets around the 38 and 40 figures.

In the short term, I anticipated the formation of wave 3 or c with targets around 1.3280 and 1.3360, corresponding to the 76.4% and 61.8% Fibonacci retracement levels. These targets have been achieved. Wave 3 or c continues to build, and the current wave set is beginning to show impulsive characteristics. Therefore, we can expect continued upward pricing with targets around 1.3580 and 1.3630.

Key Principles of My Analysis:

1. Wave structures should be simple and understandable. Complex structures are difficult to trade and often undergo changes.
2. If you have no confidence in market trends, it is better not to enter the market.
3. There can never be 100% certainty regarding the direction of movement. Remember to use protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.

The material has been provided by InstaForex Company - www.instaforex.com.

EUR/USD. Star Report: Why Did Traders Ignore U.S. Inflation Data?

.The data released on Thursday showed a slowdown in U.S. inflation. All components of the report were in the red zone, falling short of forecasted levels. On one hand, this is an important—one could say pivotal—moment for the EUR/USD pair (as well as for other dollar pairs). Now, representatives of the "dovish camp" at the Federal Reserve have additional arguments to support their position. A weak CPI is a strong card for the "doves" amid a cooling U.S. labor market, a declining ISM manufacturing index, stagnant retail sales, and weaker consumer activity. All these factors contribute to the case for further Fed rate cuts. However, there is one major "but" regarding inflation, which we will discuss shortly.

According to data released on Thursday, the overall consumer price index in November decreased to 2.7% year-on-year, marking the lowest level since July, after rising to 3.0% in October. At the same time, most analysts had forecasted an increase to 3.1%. The core CPI, excluding food and energy prices, dropped to 2.6%, while the forecast anticipated a rise to 3%. This is the lowest level for the indicator since March 2021. The smallest price increases were recorded for automobiles (0.6%) and clothing (0.2%). A slowdown in rental prices—one of the index's largest components—was also observed. Some consumer services (such as hotels and entertainment) showed weak growth or even a slowdown.

Despite such a uniformly negative result, buyers of EUR/USD are not in a rush to "pop the champagne." The pair impulsively jumped to 1.1763 but then retreated to the base of the 17 figure. Market participants expressed doubts about the "truthfulness" of the published data. According to many analysts, the downward trend in key inflation indicators was caused by a technical effect. The reason is that, due to the prolonged shutdown, the BLS (Bureau of Labor Statistics) began collecting November data later than usual, just before the holiday season (Thanksgiving and "Black Friday"). This is a season of holiday sales when retailers lower prices by offering discounts and promotions.

Most economists surveyed by the Financial Times believe that the November report is a "star report," an inflation indicator that is technically understated and "does not fully reflect the correct decline in inflation." It is presumed that the actual inflation dynamics may be higher.

It is also important to note that the publication of the October report was canceled: BLS officials stated that it was not possible to collect data for that month retrospectively. Meanwhile, the November report was released in truncated form (it does not include monthly figures)—market participants are forced to evaluate inflation dynamics solely on annual figures.

In other words, the overall skepticism of traders appears quite justified. Based on the data released on Thursday, we cannot confidently say that a sustainable (keyword) downward inflation trend is underway. For a proper evaluation, we need to wait at least for the December report—and only then draw any "far-reaching conclusions."

Given the dynamics of EUR/USD, traders have come to the consensus that optimistic interpretations of the inflation report are erroneous. After updating the intraday high (1.1763), the pair retreated to previous positions near the bottom of the 17 figure.

Another indication that traders were skeptical of the release. According to the CME FedWatch tool, the probability of a Fed rate cut at the January meeting is currently at 26%. Prior to the release, this probability was assessed at 23%. Thus, despite the "red hue" of the CPI report, dovish expectations regarding further Fed actions have not intensified in the market. The probability of a rate cut at the March meeting has also increased slightly—from 42% to 47%.

In other words, market participants are nearly certain that the central bank will keep the interest rate unchanged in January, with the likelihood of a March cut assessed at 50/50. Similar assessments were made before the report's publication, which essentially did not alter forecast expectations.

So, fundamentally, we have returned to the "zero point"—the fate of interest rates will be determined by inflation, the December figure of which we will only learn in January (along with the December Non-Farm Payrolls). The current situation remains suspended: the scales could tilt either towards a "dovish" scenario or towards maintaining the status quo.

The EUR/USD pair has also remained at its previous positions, between the middle and upper lines of the Bollinger Bands on the daily timeframe, as well as above all the lines of the Ichimoku indicator. Thus, the priority remains for long positions, but the cap of the upward movement stands at 1.1770 (the upper line of the Bollinger Bands on the four-hour chart).

The material has been provided by InstaForex Company - www.instaforex.com.

Institutional Capital Flows Back into Bitcoin

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December 17 was a landmark day for the cryptocurrency market: American spot Bitcoin exchange-traded funds witnessed an impressive net inflow of $457.3 million — the largest daily influx of institutional investment in the past month and a half. This occurred despite Bitcoin's price drop, which continues to trade around $86,000, about 32% below its historical high of $126,000 recorded in October.

The flagship fund FBTC from Fidelity emerged as the main driver of this growth, securing $391.5 million in a single day. This increased the fund's total net assets to $12.4 billion. IBIT from BlackRock followed closely with an inflow of $111.2 million. Together, these two giants not only reversed the trend of two days of outflows totaling $635 million but also pushed the cumulative net inflow into American spot Bitcoin ETFs above $57 billion. The funds' total net assets now exceed $112 billion.

On December 17, Bitcoin traded at $87,822, but the next day it dropped to $86,065—a decline of nearly 2%. Despite this, institutional investors continue to build their positions.

Analysts following capital movements view this as "early positioning": major players like Fidelity and BlackRock are accumulating assets not in pursuit of momentum but with long-term expectations, especially ahead of significant economic events such as the Fed meeting on December 17-18 and the upcoming consumer price index data.

Trading activity was accompanied by high volatility: on December 17, Bitcoin briefly surpassed the $90,000 mark before sharply correcting downward. This was caused by the liquidation of leveraged positions totaling around $400 million. Amid these events, spot Ethereum ETFs continued to lose value, experiencing outflows of $22.4 million, marking the fifth consecutive day of losses.

Interestingly, the primary inflow of investments came from the largest management companies: Fidelity and BlackRock, while smaller players (such as ARKB from Ark Invest and BITB from Bitwise) reported outflows. This indicates growing investor confidence, particularly in products backed by leading Wall Street institutional brands.

Today, Bitcoin ETFs account for about 6.5% of the cryptocurrency market's total market capitalization. This underscores that institutional flows play an increasingly significant role in shaping demand and supply in the market.

For traders, these developments open new opportunities. The increased inflows into Bitcoin ETFs could signal a long-term upward trend, despite short-term volatility. Such activity from institutions is a clear signal for a potential market reversal or stabilization.

Traders should closely monitor the actions of large players: inflows into funds can precede major market movements. Additionally, with proper risk management, speculation on volatility is possible, especially during moments of leverage position liquidations.

In summary, the market is alive, interest is growing, and opportunities remain for both long-term investors and active traders.

The material has been provided by InstaForex Company - www.instaforex.com.

DXY. Price Analysis. Forecast. The U.S. Dollar Faces Challenges

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On Thursday, the U.S. Dollar Index (DXY), which tracks the dollar's value against a basket of currencies, was struggling to build on the moderate gains seen the previous day. After the release of disappointing U.S. Consumer Price Index (CPI) data, Wednesday's gains were completely erased by downward pressure. This data will play a crucial role in determining the next steps the Federal Reserve will take regarding interest rates.

Despite the Fed's cautious outlook, amid clear signs of a weakening U.S. labor market, traders are pricing in the possibility of two more rate cuts in 2026. Additionally, there are rumors that the new Fed Chair will adopt a dovish monetary policy and, under political pressure, will further lower interest rates. Furthermore, according to U.S. President Donald Trump's statement on Wednesday, the next Fed chair will be someone who advocates substantial rate cuts.

However, Federal Reserve Governor Christopher Waller—one of the five finalists to succeed Jerome Powell—stated that he would emphasize the importance of central bank independence specifically for President Trump. This assertion had a positive effect on the dollar's value, providing some support. Overall, however, fundamental indicators remain bearish, suggesting the U.S. dollar's path of least resistance is downward.

Even from a technical standpoint, Wednesday's and Thursday's declines near the key 100-day moving average indicate short-term negative sentiment.

Therefore, any attempts at recovery should still be viewed as selling opportunities. Moreover, the oscillators on the daily chart are showing negative signals, and the 100-day SMA, currently at around 98.60, serves as the primary near-term resistance for any upward movement.

Immediate Support and Resistance Levels:

• Support: 98.10, approaching the round level of 98.00.
• Resistance: 98.60 (100-day SMA).

In summary, the U.S. dollar faces challenges ahead, and traders should remain cautious in their strategies as the market reacts to macroeconomic data and central bank decisions in the near future.

The material has been provided by InstaForex Company - www.instaforex.com.

The Euro Regains Its Confidence

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The European Central Bank's (ECB) upward revisions to inflation and GDP forecasts, amidst a slowdown in U.S. CPI, allow the EUR/USD pair to continue its rally.

When the market does not move in the expected direction, it can make a sharp turn the opposite way. The ECB meeting and the U.S. inflation report provided the euro with additional advantages and invited the EUR/USD pair to rise. U.S. consumer prices slowed more than expected, while the ECB raised its inflation and GDP forecasts. What better reason could there be to sell the dollar and buy the regional currency? Unfortunately, traders made this decision with some delay.

The ECB expects inflation in the eurozone to rise by 2.1% in 2025, 1.9% in 2026, and 1.8% in 2027, with a return to the target expected only in 2028. The GDP forecast for this year was raised from 1.2% to 1.4%, and for next year, from 1% to 1.2%. The economy is expected to expand by 1.4% each year over the next two years.

ECB's Inflation and GDP Forecasts

The ECB is determined to anchor inflation near 2% and will continue to base its decisions on incoming data. Christine Lagarde noted the positive impact of government spending and private investment on GDP. She still believes that rates will continue to hinder economic growth within the currency bloc.

European inflation has been confined within a narrow range since spring. In the short term, CPI is expected to slow due to energy prices.

Meanwhile, U.S. core inflation slowed from 3% to 2.6% in November, while consumer prices dropped from 3.1% to 2.7%. This trend has raised the probability of a Fed rate cut in March to 58%. Just a couple of days ago, derivatives gave the first month of spring a fifty-fifty chance. Simultaneously, the risks of an earlier resumption of the monetary easing cycle have increased to 29%, potentially in January.

Thus, anchoring inflation in the eurozone effectively means that the ECB has completed its cycle of monetary easing. The slowdown in U.S. consumer prices allows the Fed more leeway regarding further rate cuts. Despite the "hawks'" aspirations, the "doves" dominate within the FOMC. Their influence is likely to grow as the White House reshapes the committee's composition.

The divergence in monetary policy is a strong argument in favor of buying EUR/USD. Especially if the Federal Reserve rates drop by 100 basis points to 2.75%, as Christopher Waller suggests. I wouldn't be surprised if Waller's chances of becoming Fed Chair were suddenly boosted after his meeting with Donald Trump, which the market would likely welcome.

On the daily chart, EUR/USD tested the 1.176 pivot level. The first attempt by the bulls was unsuccessful, but they are not losing hope. Success in a second assault will enable the formation of long positions targeting 1.187. Selling can be reconsidered if the quotes for the main currency pair fall below the upper boundary of the fair-value range at 1.1725.

The material has been provided by InstaForex Company - www.instaforex.com.

USD/JPY: December Meeting of the Bank of Japan – Is a "Dovish Surprise" Possible?

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The USD/JPY pair has traded within a broad range of 154.50 to 157.00 over the past three weeks, bouncing alternately between the upper and lower boundaries. Looking at the weekly chart, it becomes evident that traders are uncertain about the direction of price movement. Upward impulses are followed by downward movements, and vice versa. The contradictory outcomes of the December FOMC meeting have not helped traders, neither bulls nor bears. Ahead of this meeting, the USD/JPY pair approached the upper boundary of the aforementioned price range but fell to the lower boundary after the verdict was announced, marking a low of 154.40. However, in this price area, sellers took profits, and buyers regained control of the pair.

On Friday, the currency pair will again enter a zone of heightened price volatility as the results of the two-day Bank of Japan meeting are announced—the last meeting of the year.

Preliminary forecasts suggest that the central bank will raise interest rates by 25 basis points. This would be the central bank's first such action this year. The primary reason for this decision is inflation, which remains stubbornly above the target level of 2%.

Recall that BoJ Governor Kazuo Ueda hinted earlier in December that an interest rate hike might occur at the December meeting. He indicated that this decision was coordinated with Prime Minister Sanae Takachi, despite her being an advocate for ultra-loose monetary policy.

Ueda justified his position with rising inflation, referencing the latest CPI growth report for October. Indeed, the overall consumer price index accelerated to 3.0% in October, its highest level since July of this year. The index, excluding fresh food prices, also rose to 3.0%. This component shows an upward trend following a prolonged decline. The core CPI, excluding fresh food and energy, accelerated to 3.1% year-on-year in October, up from 3.0% the previous month.

Such a result supports tightening monetary policy.

However, the interest rate increase is already factored into the prices. The intrigue remains regarding the central bank's further decisions. According to the baseline scenario, the central bank may allow further interest rate hikes next year, tentatively in April, once it has sufficient information on wage trajectories in Japan. According to Bloomberg, the central bank may indeed indicate its willingness for further rate increases, but only if the economic picture supports it—"if the economic outlook develops as expected."

Whether the current economic picture supports such a decision remains an open question.

We should note that just hours before the announced interest rate decision in Japan, national inflation growth data for November will be published. Forecasts suggest the overall CPI will slow to 2.9%, while the core CPI (excluding fresh food prices) will remain at 3%.

It is also worth noting that the Tokyo consumer price index, considered a leading indicator of the country's overall price dynamics, slowed to 2.7% in November, down from 2.8% in October. Excluding fresh food prices, the index remained at the October level of 2.8%. It can be assumed that the national inflation growth report for November will also come out in the red zone, which may lead to a more dovish tone in the accompanying statement.

Additionally, it is essential to remember that at the beginning of December, the final GDP growth data for Japan for the third quarter was released. The figure was revised downward. According to the final data, the Japanese economy contracted by 0.6% compared to the second quarter of this year (initially a less severe decline of 0.4% was anticipated), and by 2.3% compared to the third quarter of 2024 (initially projected at -1.8%).

These listed fundamental factors do not support hawkish rhetoric from the central bank.

In other words, although the formal outcomes of the BoJ's December meeting are predetermined, the intrigue remains, as there is a risk of a "dovish hike." That is, the central bank may raise rates by 25 basis points but will use cautious wording, hinting at a wait-and-see stance.

Given the uncertainty, it is advisable to maintain a wait-and-see stance on the USD/JPY pair. Moreover, the technical indicators also paint an uncertain picture: on the daily chart, the pair is located on the middle line of the Bollinger Bands indicator, which coincides with the Tenkan-sen and Kijun-sen lines, and remains above the Kumo cloud. If the BoJ indeed implements a "dovish hike" scenario, the pair may test the upper band of the Bollinger Bands on the D1 timeframe, which corresponds to 157.00. However, if the regulator maintains a hawkish stance, the 154.50 target will reemerge, aligned with the lower Bollinger Band on the same timeframe.

The material has been provided by InstaForex Company - www.instaforex.com.

GBP/USD Analysis on December 19, 2025

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For GBP/USD, the wave pattern continues to indicate the formation of an upward trend segment (lower chart), but over the past six months it has taken on a complex and extended form (upper chart). The trend segment that began on July 1 can be considered wave 4, or any large corrective wave, since it clearly has a corrective rather than an impulsive internal wave structure. The same applies to its internal sub-waves. The downward wave structure that started on September 17 took the form of a five-wave pattern a–b–c–d–e and has been completed. The instrument is now in the process of forming a new upward wave sequence.

Of course, any wave structure can become more complex and extended at any moment. Even the presumed wave 4, which has already been forming for six months, could take on a five-wave form, in which case we would observe correction for several more months. However, at this time, an upward wave sequence has every chance of developing. If this is indeed the case, the first two waves of this segment have already been formed, and we are now observing the formation of wave 3 or wave c, which is taking on an impulsive form and gives hope for an impulsive nature of the current wave sequence.

The GBP/USD exchange rate remained virtually unchanged throughout Thursday. Most likely, we will still see significant price movements by the end of the day, but I believe that the majority of market participants had expected stronger moves by this point. However, the meetings of the Eurozone and UK central banks ended exactly as most traders had expected. The ECB kept interest rates unchanged, while the Bank of England cut its rate by 25 basis points. Yesterday, I said that the BoE's decision to cut rates was likely already priced in, as it was obvious even before the inflation report. Even the MPC vote came without surprises—five policymakers voted in favor of a rate cut, exactly as expected. Therefore, neither of these events revealed any discrepancy between expectations and reality.

Accordingly, the most significant event of the day was not the ECB or the Bank of England meetings, but the U.S. inflation report. This report opens up new "dovish" prospects for the Federal Reserve, much to the delight of Donald Trump. Let me remind you that the labor market in October–November did not show growth or recovery that would allow the Fed to take a pause, and the unemployment rate jumped straight to 4.6%, something no one in the market expected. Consequently, if the FOMC decides to carry out another round of easing in January, there will be nothing surprising about it. That said, the Bank of England also received grounds yesterday to continue easing policy. However, the Bank of England does not have a Donald Trump demanding rate cuts down to ECB levels.

Overall Conclusions

The wave picture for GBP/USD has changed. We continue to deal with an upward, impulsive trend segment, but its internal wave structure has become complex. The downward corrective structure a–b–c–d–e within C of wave 4 appears complete, as does wave 4 as a whole. If this is indeed the case, I expect the main trend segment to resume its development with initial targets around the 3.8000 and 4.0000 levels.

In the short term, I expected the formation of wave 3 or wave c with targets located near 1.3280 and 1.3360, which correspond to the 76.4% and 61.8% Fibonacci levels. These targets have been reached. Wave 3 or wave c continues to develop, and the current wave sequence is beginning to take on an impulsive character. Therefore, further gains can be expected, with targets around 1.3580 and 1.3630.

The higher-timeframe wave structure looks almost perfect, even though wave 4 moved beyond the high of wave 1. However, I would like to remind you that ideal wave structures exist only in textbooks—real market conditions are far more complex. At this time, I see no grounds for considering alternative scenarios to the bullish trend segment.

Core Principles of My Analysis

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often signal changes.
2. If there is no confidence in what is happening in the market, it is better to stay out of it.
3. There is no and never can be 100% certainty about market direction. Do not forget about protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.

The material has been provided by InstaForex Company - www.instaforex.com.

EUR/USD Analysis on December 19, 2025

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The wave pattern on the 4-hour chart for EUR/USD has changed, but overall it still remains quite clear. There is no talk of canceling the upward trend segment that began in January 2025; however, the wave structure starting from July 1 has taken on a complex and extended form. In my view, the instrument has completed the formation of corrective wave 4, which took a very unconventional shape. Within this wave, we observed exclusively corrective structures, so there is no doubt about the corrective nature of the decline.

In my opinion, the construction of the upward trend segment is not complete, and its targets extend as far as the 2.5000 level. The series of waves a–b–c–d–e looks complete; therefore, I expect the formation of a new upward wave sequence in the coming weeks. We have seen the presumed waves 1 and 2, and the instrument is now in the process of forming wave 3, or wave c. I expected this wave to push the instrument up to the 1.1717 level, which corresponds to the 38.2% Fibonacci level; however, this wave is taking on a more extended form, which is very positive, as it may turn out to be impulsive. Along with it, the entire upward wave sequence could also become impulsive.

The EUR/USD exchange rate rose by several dozen basis points during Thursday, heading into the U.S. session. At the same time, it is not entirely clear which factor specifically drove the increase in demand for the instrument. Let me remind you that at approximately the same time today, the outcomes of the ECB meeting, the Bank of England meeting, and, to top it all off, the U.S. inflation report for November were released. Let us set aside the Bank of England meeting, as it is more relevant to the British pound, and focus on the ECB meeting and U.S. inflation.

The ECB meeting was unlikely to surprise anyone. I said yesterday that maintaining the current monetary policy was easy to predict given the existing economic indicators. The European regulator did not "reinvent the wheel" and made the decision the market was expecting. I will not go into details for now, as it is important to understand that nothing fundamentally changed in the news backdrop for the European currency.

The U.S. inflation report, however, is far more interesting. Earlier this week, the UK inflation report was released, surprising many with a slowdown to 3.2%, which allowed the Bank of England to ease policy today without concern. Now it is the turn of U.S. inflation, which suddenly slowed to 2.7%, allowing the Federal Reserve to carry out another round of policy easing in January. I believe the dollar is declining today solely because of the inflation report, which sharply increases the chances of another interest rate cut in January.

Overall Conclusions

Based on the EUR/USD analysis conducted, I conclude that the pair continues to form an upward trend segment. Donald Trump's policies and the Federal Reserve's monetary policy remain significant factors behind the long-term decline of the U.S. dollar. The targets of the current trend segment may extend as far as the 2.5000 level. The current bullish wave sequence is beginning to gain momentum, and I would like to believe that we are now witnessing the formation of an impulsive wave structure that is part of global wave 5. In this case, growth toward the 2.5000 level should be expected, as I have mentioned before.

On a smaller timeframe, the entire upward trend segment is clearly visible. The wave structure is not the most standard, as corrective waves differ in size. For example, the higher-degree wave 2 is smaller than the internal wave 2 within wave 3. However, this also happens. I would like to remind you that it is best to identify clear and understandable structures on charts, rather than trying to strictly label every single wave. At present, the bullish structure raises no doubts.

Core Principles of My Analysis

1. Wave structures should be simple and clear. Complex structures are difficult to trade and often signal changes.
2. If there is no confidence in what is happening in the market, it is better to stay out of it.
3. There is no and never can be 100% certainty about market direction. Do not forget about protective Stop Loss orders.
4. Wave analysis can be combined with other types of analysis and trading strategies.

The material has been provided by InstaForex Company - www.instaforex.com.

USD/JPY: Tips for Beginner Traders on December 18th (U.S. Session)

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Trade Review and Trading Tips for the Japanese Yen

None of the levels I identified were tested during the first half of the day.

In the second half of the day, extremely important economic releases are expected: the U.S. Consumer Price Index (CPI) and its core version, which excludes food and energy prices. In addition, weekly data on initial jobless claims in the United States will be published. The market is on hold ahead of the news. Investors and market participants around the world are closely watching the upcoming reports, as these data may have a significant impact on the future monetary policy strategy of the Federal Reserve. Inflation—especially the core measure—remains a key benchmark for the Fed's interest rate decisions. If CPI data come in above forecasts, this may intensify concerns about persistent inflationary pressure, which in turn could lead to a stronger dollar against the yen. At the same time, weaker-than-expected data may reduce inflation concerns and allow the Fed to take a more dovish stance. The report on initial jobless claims is no less important. An increase in this indicator may signal weakening in the labor market, which could also affect Fed decisions. Historically, a strong labor market has given the Fed greater confidence to raise interest rates to fight inflation; however, existing unemployment issues in the U.S. could be further exacerbated by a sharp rise in price pressures.

As for the intraday strategy, I will rely more on the implementation of scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: Today, I plan to buy USD/JPY upon reaching an entry point around 156.00 (green line on the chart), with a target of growth toward the 156.59 level (the thicker green line on the chart). Around 156.59, I will exit long positions and open short positions in the opposite direction (aiming for a 30–35 point move in the opposite direction from that level). A rise in the pair can be expected only after an increase in U.S. inflation.Important! Before buying, make sure that the MACD indicator is above the zero line and is just beginning to rise from it.

Scenario No. 2: I also plan to buy USD/JPY today in the case of two consecutive tests of the 155.79 price level while the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to a reversal of the market upward. Growth toward the opposite levels of 156.00 and 156.59 can be expected.

Sell Signal

Scenario No. 1: I plan to sell USD/JPY today after an update (break) of the 155.79 level (red line on the chart), which should lead to a rapid decline in the pair. The key target for sellers will be the 155.14 level, where I will exit short positions and also open buy positions in the opposite direction (aiming for a 20–25 point move in the opposite direction from that level). Pressure on the pair will return only in the case of a sharp drop in U.S. inflation.Important! Before selling, make sure that the MACD indicator is below the zero line and is just beginning to decline from it.

Scenario No. 2: I also plan to sell USD/JPY today in the case of two consecutive tests of the 156.00 price level while the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a reversal of the market downward. A decline toward the opposite levels of 155.79 and 155.14 can be expected.

What You See on the Chart

• Thin green line – the entry price at which the trading instrument can be bought.
• Thick green line – the estimated price where Take Profit orders can be placed or profits can be taken manually, as further growth above this level is unlikely.
• Thin red line – the entry price at which the trading instrument can be sold.
• Thick red line – the estimated price where Take Profit orders can be placed or profits can be taken manually, as further decline below this level is unlikely.
• MACD indicator – when entering the market, it is important to rely on overbought and oversold zones.

Important: Beginner Forex traders should be extremely cautious when making market entry decisions. Ahead of major fundamental reports, it is best to stay out of the market to avoid being caught in sharp price fluctuations. If you decide to trade during news releases, always place stop orders to minimize losses. Without stop orders, you can lose your entire deposit very quickly, especially if you do not use proper money management and trade large volumes.

And remember, successful trading requires a clear trading plan, such as the one presented above. Spontaneous trading decisions based on the current market situation are inherently a losing strategy for an intraday trader.

The material has been provided by InstaForex Company - www.instaforex.com.

GBP/USD: Tips for Beginner Traders on December 18th (U.S. Session)

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Trade Review and Trading Tips for the British Pound

The test of the 1.3359 price level occurred when the MACD indicator was just beginning to move downward from the zero line, which confirmed a correct entry point for selling the pound. As a result, the pair declined by 25 points.

In the second half of the day, very important data are expected on the U.S. Consumer Price Index (CPI) and the CPI excluding food and energy prices. Weekly U.S. initial jobless claims data are unlikely to attract much interest. Higher-than-expected CPI readings could spark concerns about persistent inflationary pressure in the United States, which in turn may push the Federal Reserve to be more cautious about cutting interest rates next year. On the other hand, weaker-than-expected data could ease inflation concerns, leading to a renewed decline in the U.S. dollar against the pound. As for the initial jobless claims report, an increase in claims may indicate a weakening labor market, which could also affect the U.S. dollar in the short term.

As for the intraday strategy, I will rely more on the implementation of scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: Today, I plan to buy the pound upon reaching an entry point around 1.3365 (green line on the chart), with a target of growth toward the 1.3420 level (the thicker green line on the chart). Around 1.3420, I will exit long positions and open short positions in the opposite direction (aiming for a 30–35 point move in the opposite direction from that level). A rise in the pound today can be expected only after weak U.S. inflation data. Important! Before buying, make sure that the MACD indicator is above the zero line and is just beginning to rise from it.

Scenario No. 2: I also plan to buy the pound today in the case of two consecutive tests of the 1.3339 price level while the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to a reversal of the market upward. Growth toward the opposite levels of 1.3365 and 1.3420 can be expected.

Sell Signal

Scenario No. 1: I plan to sell the pound today after an update (break) of the 1.3339 level (red line on the chart), which should lead to a rapid decline in the pair. The key target for sellers will be the 1.3290 level, where I will exit short positions and also open buy positions in the opposite direction (aiming for a 20–25 point move in the opposite direction from that level). Pressure on the pound may return at any moment today. Important! Before selling, make sure that the MACD indicator is below the zero line and is just beginning to fall from it.

Scenario No. 2: I also plan to sell the pound today in the case of two consecutive tests of the 1.3365 price level while the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a reversal of the market downward. A decline toward the opposite levels of 1.3339 and 1.3290 can be expected.

What You See on the Chart

• Thin green line – the entry price at which the trading instrument can be bought.
• Thick green line – the estimated price where Take Profit orders can be placed or profits can be taken manually, as further growth above this level is unlikely.
• Thin red line – the entry price at which the trading instrument can be sold.
• Thick red line – the estimated price where Take Profit orders can be placed or profits can be taken manually, as further decline below this level is unlikely.
• MACD indicator – when entering the market, it is important to rely on overbought and oversold zones.

Important: Beginner Forex traders should be extremely cautious when making market entry decisions. Ahead of major fundamental reports, it is best to stay out of the market to avoid being caught in sharp price fluctuations. If you decide to trade during news releases, always place stop orders to minimize losses. Without stop orders, you can lose your entire deposit very quickly, especially if you do not use proper money management and trade large volumes.

And remember, successful trading requires a clear trading plan, such as the one presented above. Spontaneous trading decisions based on the current market situation are inherently a losing strategy for an intraday trader.

The material has been provided by InstaForex Company - www.instaforex.com.

EUR/USD: Tips for Beginner Traders on December 18th (U.S. Session)

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Trade Review and Trading Tips for the European Currency

The test of the 1.1737 price level occurred when the MACD indicator was just beginning to move downward from the zero line, which confirmed a correct entry point for selling the euro. As a result, the pair declined by 25 points.

Ahead of the ECB's decision on key interest rates, the euro showed slight weakness. Traders are anxiously awaiting guidance on the future monetary policy strategy in the euro area, although changes are considered unlikely. It is widely expected that the ECB will keep rates unchanged, with the main focus shifting to the press conference led by Christine Lagarde.

At the same time, a heavy flow of economic news from the United States is expected. The key event will be the release of U.S. Consumer Price Index (CPI) data. Special attention will be paid to both the headline CPI and the CPI excluding food and energy prices—the so-called Core CPI. If the published data come in above expectations, this could trigger a strengthening of the U.S. dollar. Results below forecasts, on the contrary, may lead to a decline in the dollar.

As for the intraday strategy, I will rely more on the implementation of scenarios No. 1 and No. 2.

Buy Signal

Scenario No. 1: Today, buying the euro is possible if the price reaches the 1.1735 level (green line on the chart), with a target of growth toward the 1.1776 level. At 1.1776, I plan to exit the market and also sell the euro in the opposite direction, aiming for a move of 30–35 points from the entry point. A strong rise in the euro can be expected only after a decline in U.S. inflation.Important! Before buying, make sure that the MACD indicator is above the zero line and is just beginning to rise from it.

Scenario No. 2: I also plan to buy the euro today in the case of two consecutive tests of the 1.1717 price level while the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to a reversal of the market upward. A rise toward the opposite levels of 1.1735 and 1.1776 can be expected.

Sell Signal

Scenario No. 1: I plan to sell the euro after the price reaches the 1.1717 level (red line on the chart). The target will be the 1.1683 level, where I intend to exit the market and immediately buy in the opposite direction (aiming for a 20–25 point move in the opposite direction from this level). Pressure on the pair will return today if U.S. inflation increases.Important! Before selling, make sure that the MACD indicator is below the zero line and is just beginning to decline from it.

Scenario No. 2: I also plan to sell the euro today in the case of two consecutive tests of the 1.1735 price level while the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a reversal of the market downward. A decline toward the opposite levels of 1.1717 and 1.1683 can be expected.

What You See on the Chart

• Thin green line – entry price at which the instrument can be bought.
• Thick green line – estimated price where Take Profit can be set or profits can be taken manually, as further growth above this level is unlikely.
• Thin red line – entry price at which the instrument can be sold.
• Thick red line – estimated price where Take Profit can be set or profits can be taken manually, as further decline below this level is unlikely.
• MACD indicator – when entering the market, it is important to rely on overbought and oversold zones.

Important: Beginner Forex traders should be extremely cautious when making market entry decisions. Ahead of major fundamental reports, it is best to stay out of the market to avoid being caught in sharp price fluctuations. If you decide to trade during news releases, always place stop orders to minimize losses. Without stop orders, you can lose your entire deposit very quickly, especially if you do not use proper money management and trade large volumes.

And remember, successful trading requires a clear trading plan, such as the one presented above. Spontaneous trading decisions based on the current market situation are inherently a losing strategy for an intraday trader.

The material has been provided by InstaForex Company - www.instaforex.com.

Level and Target Adjustments for the U.S. Session – December 18th

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Today, only the Canadian dollar was traded using the Mean Reversion strategy. I traded the British pound and the Japanese yen using the Momentum strategy.

The euro and the pound edged lower ahead of the European Central Bank's and the Bank of England's interest rate decisions. Investors are holding their breath, waiting for signals regarding future monetary policy. The ECB is expected to keep interest rates unchanged, but particular attention will be paid to Christine Lagarde's press conference. The Bank of England, however, is preparing to cut interest rates, which could extend the decline of the British pound.

In addition, the economic calendar is set to be quite busy, implying heightened volatility in the financial markets. At the center of attention will be the release of U.S. Consumer Price Index (CPI) data, a key indicator of inflationary pressure. In particular, both the headline CPI and the CPI excluding food and energy prices—the so-called Core CPI—will be closely monitored. The latter is considered a more stable indicator that better reflects underlying inflation trends, as it excludes volatile components subject to strong short-term fluctuations. If the published figures exceed forecasts, this could trigger a strengthening of the U.S. dollar, as it would be interpreted as a signal that the Federal Reserve will have to be more cautious in cutting interest rates. Conversely, weaker-than-expected data could lead to a softer dollar.

At the same time, the release of weekly U.S. initial jobless claims data will also draw attention. Although this indicator is not as significant as the CPI, it serves as an important gauge of labor market conditions.

If the data are strong, I will rely on the Momentum strategy. If there is no market reaction to the releases, I will continue to use the Mean Reversion strategy.

Momentum Strategy (Breakout) for the Second Half of the Day

EUR/USD

• Buying on a breakout above 1.1730 may lead to euro gains toward 1.1750 and 1.1775.
• Selling on a breakout below 1.1705 may lead to a decline toward 1.1680 and 1.1640.

GBP/USD

• Buying on a breakout above 1.3370 may lead to pound gains toward 1.3405 and 1.3435.
• Selling on a breakout below 1.3338 may lead to a decline toward 1.3312 and 1.3287.

USD/JPY

• Buying on a breakout above 155.12 may lead to dollar gains toward 156.55 and 156.94.
• Selling on a breakout below 155.80 may lead to dollar selling toward 155.40 and 154.80.

Mean Reversion Strategy (Pullback) for the Second Half of the Day

EUR/USD

• I will look for selling opportunities after a failed breakout above 1.1736, on a return below this level.
• I will look for buying opportunities after a failed breakout below 1.1707, on a return back to this level.

GBP/USD

• I will look for selling opportunities after a failed breakout above 1.3367, on a return below this level.
• I will look for buying opportunities after a failed breakout below 1.3331, on a return back to this level.

AUD/USD

• I will look for selling opportunities after a failed breakout above 0.6621, on a return below this level.
• I will look for buying opportunities after a failed breakout below 0.6600, on a return back to this level.

USD/CAD

• I will look for selling opportunities after a failed breakout above 1.3786, on a return below this level.
• I will look for buying opportunities after a failed breakout below 1.3764, on a return back to this level.

The material has been provided by InstaForex Company - www.instaforex.com.

GBP/JPY. Analysis and Forecast

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At present, the GBP/JPY pair has entered a phase of bullish consolidation, remaining stable above the round level of 208.00 amid the upcoming interest rate decisions by the Bank of England and the Bank of Japan.

Later today, the Bank of England will announce its interest rate decision, while on Friday the results of the Bank of Japan's two-day monetary policy meeting are expected to be published. After the pause in November, it is assumed that the Bank of England may move toward cutting rates amid signs of easing inflationary pressures. This backdrop is reinforced by a rise in the UK unemployment rate to the highest levels seen since 2021, as well as a slowdown in wage growth to lows of more than three years. This confirms the need for further monetary policy easing by the UK central bank.

These expectations sharply contrast with the growing anticipation of a rate hike by the Bank of Japan on Friday, which is viewed as a supportive factor for the Japanese yen. Against a backdrop of generally weaker sentiment in equity markets, the strengthening of the Japanese yen gains safe-haven status and restrains the growth of the GBP/JPY pair. However, supporters of the Far Eastern currency prefer to wait for additional signals regarding the future policy of the Bank of Japan before taking new steps, as they fear a deterioration in the country's financial position.

Thus, to obtain better trading opportunities and understand the further movement of the market, attention should be paid to the Bank of England's decision today and, tomorrow, to the comments by Bank of Japan Governor Kazuo Ueda during the press conference following the meeting. These could significantly influence the short-term dynamics of the Japanese yen and set the direction for the currency pair. At the same time, divergent expectations regarding the approaches of the two central banks require caution from market participants when attempting to open new positions in favor of further growth in the GBP/JPY pair.

The material has been provided by InstaForex Company - www.instaforex.com.

Forex forecast 18/12/2025: EUR/USD, USD/JPY, GBP/USD, Oil, Gold and Bitcoin

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We introduce you to the daily updated section of Forex analytics where you will find reviews from forex experts, up-to-date monitoring of financial information as well as online forecasts of exchange rates of the US dollar, euro, ruble, bitcoin, and other currencies for today, tomorrow and this trading week.

Useful links:

My other articles are available in this section

InstaForex course for beginners

Popular Analytics

Open trading account

Important:

The begginers in forex trading need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp market fluctuations due to increased volatility. If you decide to trade during the news release, then always place stop orders to minimize losses.

Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes. For successful trading, you need to have a clear trading plan and stay focues and disciplined. Spontaneous trading decision based on the current market situation is an inherently losing strategy for a scalper or daytrader.

#instaforex #analysis #sebastianseliga

The material has been provided by InstaForex Company - www.instaforex.com.

EUR/USD Forecast on December 18, 2025

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On Wednesday, the EUR/USD pair declined to the 38.2% retracement level at 1.1718, rebounded from it, reversed in favor of the European currency, and began a growth phase toward the resistance level at 1.1795–1.1802. A consolidation below the 1.1718 level would favor the US dollar and a resumption of the decline toward the support level at 1.1645–1.1656.

The wave structure on the hourly chart remains simple and clear. The most recent completed downward wave did not break the low of the previous wave, while the latest upward wave broke the previous high. Thus, the trend officially remains "bullish." It would be an exaggeration to call it strong, but in recent weeks the bulls have regained confidence and resumed their attacks with renewed strength. The Federal Reserve's monetary policy easing supports further growth of the euro, and the ECB is unlikely to create any problems for the single currency in the near future.

On Wednesday, the news background for both the euro and the dollar was rather sparse, but today traders are facing a heavy flow of economic data. The starting point is the ECB meeting. Although the market does not expect a rate cut or hike, attention will focus on Christine Lagarde's speech, in which, according to some economists, hints of monetary policy tightening in 2026 may appear. In my view, this is quite a bold assumption, as inflation in the European Union is currently close to the 2% target, leaving no need to either raise or cut rates. Nevertheless, today marks the ECB's final meeting of the year, so President Lagarde may "look ahead" to next year. The more "hawkish" her outlook, the stronger the case for another bullish attack. And a new attack within a bullish trend is a welcome development. Also due today is an important US inflation report, which will be the final release in a block of statistics that markets have been awaiting with such anticipation. Depending on the outcome of this report, either the bulls or the bears may receive support. One thing is certain—today promises to be an interesting day.

On the 4-hour chart, the pair reversed in favor of the US dollar after a bullish divergence formed on the CCI indicator. As a result, the decline may continue for some time toward the support level at 1.1649–1.1680. A rebound from this zone would favor the European currency and a resumption of growth toward the 0.0% retracement level at 1.1829.

Commitments of Traders (COT) Report:

During the latest reporting week, professional market participants opened 8,041 long positions and closed 17,377 short positions. COT reports have resumed publication after the shutdown, but the data being released are still outdated, covering October and November. Sentiment among the "Non-commercial" group remains bullish thanks to Donald Trump and continues to strengthen over time. The total number of long positions held by speculators now stands at 243,000, while short positions total 145,000.

For thirty-three consecutive weeks, large players have been reducing short positions and increasing longs. Donald Trump's policies remain the most significant factor for traders, as they could trigger numerous problems with long-term and structural implications for the US economy. Despite the signing of several important trade agreements, analysts fear a recession in the US economy, as well as a potential loss of the Federal Reserve's independence under pressure from Trump and amid Jerome Powell's expected resignation in May next year.

News Calendar for the US and the Eurozone:

• Eurozone – ECB interest rate decision (13:15 UTC)
• United States – Consumer Price Index (13:30 UTC)
• United States – Change in initial jobless claims (13:30 UTC)
• Eurozone – ECB press conference (13:45 UTC)

The economic calendar for December 18 contains four events, three of which can be considered important. The impact of the news backdrop on market sentiment on Thursday may once again be strong.

EUR/USD Forecast and Trading Advice:

Short positions were possible on a rebound from the 1.1795–1.1802 level on the hourly chart with a target at 1.1718. The target has been reached. A consolidation below the 1.1718 level would allow new short positions to be opened with a target at 1.1656. Long positions could be opened on a rebound from the 1.1718 level with a target at 1.1795–1.1802. Today, these trades can be kept open, while closely monitoring the news flow.

The material has been provided by InstaForex Company - www.instaforex.com.