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Trading Recommendations and Analysis for GBP/USD on December 18. Pound Quickly Recovers from Setback

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Analysis of GBP/USD 5M

The GBP/USD currency pair began on Wednesday with a sharp decline. This drop in the British currency was entirely justified, as the only important report of the day—the UK inflation report—came in significantly below forecasts. While a slowdown in inflation is generally positive for the economy (or at least for consumers), it also greatly increases the likelihood of a rate cut by the Bank of England at its upcoming meeting, happening today. Consequently, the market priced in monetary policy easing, and in the second half of the day the pound unexpectedly began to recover, returning to its initial levels.

We believe the pair's growth in the second half of the day signifies several things. Namely, the market still recognizes that the dollar lacks prospects. Thus, we witnessed yet another correction and nothing more. We may see another correction today, as fundamental and macroeconomic factors could trigger a new decline in the pair. After all, today not only marks the BoE's meeting but also the release of the U.S. inflation report. Inflation data is needed to create a comprehensive picture of the U.S. economic situation.

From a technical standpoint, the upward trend remains intact despite the pair's significant decline earlier this week. We think that "flights" may continue today, but they will not change the overall trend. The pound has already corrected too much over the last six months, and this was a correction rather than a trend, as can be clearly seen on the daily timeframe. Therefore, we still anticipate upside movement.

In yesterday's 5-minute timeframe, at least two strong signals were generated. First, the pair consolidated below the Kijun-sen line, allowing for short positions to be opened. Then, with minimal deviation, the level of 1.3307 was reached, followed by a rebound that allowed the pair to return to its initial positions in the range of 1.3369-1.3396. Thus, traders had the opportunity to open two trades, both yielding decent profit.

COT Report

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

The dollar continues to decline due to Donald Trump's policies, as shown on the weekly timeframe (above). The trade war will continue in one form or another for a long time. The Federal Reserve will definitely be lowering rates in the next 12 months. Demand for the dollar will, in one way or another, be decreasing. According to the latest COT report (dated October 28) for the British pound, the "Non-commercial" group opened 7,000 buy contracts and 10,500 sell contracts. Thus, the net position of non-commercial traders decreased by 3,500 contracts over the week. However, this data is outdated, and fresh data is unavailable.

In 2025, the pound experienced significant growth, but it's essential to understand that the reason for this was one thing: Donald Trump's policies. Once this reason is mitigated, the dollar may begin to rise, but when this will happen is uncertain. It doesn't matter how rapidly the net position of the pound rises or falls (if it's falling). For the dollar, the position is declining anyway and generally at a faster pace.

Analysis of GBP/USD 1H

On the hourly timeframe, the GBP/USD pair continues to form an upward trend. We believe that medium-term growth will continue regardless of the local macroeconomic and fundamental backdrop. Data on the U.S. labor market and unemployment have been released, but traders are yet to see the U.S. and UK inflation reports, as well as the results of the BoE meeting. From a technical perspective, the price failed to consolidate below the Senkou Span B line, which is significant.

For December 18, 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, and 1.3584. The Senkou Span B (1.3308) and Kijun-sen (1.3383) lines may also be sources of signals. A Stop Loss level is recommended to be set to break even if the price moves 20 pips in the correct direction. Ichimoku indicator lines may shift throughout the day, which should be considered when determining trading signals.

On Thursday, the BoE meeting will take place in the UK, and the U.S. inflation report will be published. Both events are extremely significant and can provoke strong and unexpected market reactions. Volatility today may be very high.

Trading Recommendations:

Today, traders may consider selling if the price consolidates below the 1.3369-1.3377 area, targeting 1.3307. Long positions will become relevant if the price consolidates above the critical line with targets of 1.3437 and above.

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 robust 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 for EUR/USD on December 18. Euro Quickly Recovers from Setback

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Analysis of EUR/USD 5M

The EUR/USD currency pair declined for most of Wednesday but recovered nearly all its losses by the end of the day. Essentially, the euro returned to its level before the release of crucial U.S. labor market data. We had warned that this week might see "flights" in both directions, alternating constantly. For example, the pair's rise on Tuesday can be easily attributed to negative macroeconomic data from across the ocean. However, explaining why the euro fell on Wednesday night and for most of the day is much more challenging. It can be hypothesized that the pound sterling pulled the euro down, as an inflation report from the UK was published that should have prompted a fall in the British currency. Nonetheless, the euro rebounded quickly, just like the pound. We believe this is entirely fair and logical.

From a technical standpoint, the hourly timeframe remains in an upward trend, suggesting the pair could continue its expected growth. If it can break through the area of 1.1800-1.1830, the flat trend will officially conclude, and the upward trend of 2025 will resume. This is the scenario we anticipate after six months in the sideways channel between 1.1400 and 1.1830.

In yesterday's 5-minute timeframe, one sell signal was generated. The price consolidated below the critical line half an hour before the start of the European trading session, which allowed traders to enter short positions. However, the pair could not reach the target level of 1.1666 and returned to its starting positions by the end of the day. It seems we are expecting a new attempt to break out of the flat trend in the daily timeframe.

COT Report

The latest COT report was released last week and is dated November 18, which means it is still outdated. As shown in the illustration above, the net position of non-commercial traders has been "bullish" for an extended period, with bears struggling to enter the zone of their own superiority at the end of 2024 but quickly losing it. Since Trump took office as President of the United States for the second time, the dollar has only experienced declines. We cannot say with 100% certainty that the dollar's decline will continue, but current global developments hint at that possibility.

We still do not see any fundamental factors supporting the strengthening of the euro, while there remain plenty of factors supporting the decline of the dollar. The global downward trend is still in place, but what relevance does the direction the price has taken over the last 17 years hold now? The dollar could rise again if the overall fundamental picture changes, but there are currently no signs of that.

The indicator's red and blue lines continue to suggest 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 grew by 25,400 contracts over the week. However, these figures remain outdated and insignificant.

Analysis of EUR/USD 1H

On the hourly timeframe, the EUR/USD pair continues its upward movement, which aligns with our expectations. However, the upper line of the sideways channel at 1.1400-1.1830 has been reached, and we can now observe a technical decline, as the flat is still maintained in the daily timeframe. Essentially, we saw a reversal at the upper boundary of the channel yesterday, which suggests a pullback to the lower level is quite possible, but we still believe the upward trend will continue.

For December 18, we highlight the following trading levels: 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 Kijun-sen line (1.1749). The Ichimoku indicator lines may shift throughout the day, which needs to be considered when determining trading signals. Don't forget to set Stop Loss orders to break even if the price moves in your favor by 15 pips. This will guard against potential losses if the signal turns out to be false.

On Thursday, the Europeran Centeral Bank meeting is scheduled in the EU, and in the U.S., the inflation report will be published. We consider both events significant, but it should be understood that the ECB is unlikely to make any important decisions. The December meeting may turn out to be uneventful, as there is no need to change monetary policy parameters.

Trading Recommendations:

On Thursday, traders may consider trading from the 1.1750-1.1760 area. A price rebound from this area will make short positions relevant, targeting the Senkou Span B line. If it consolidates above this area, it will lead to another attempt to break out of the sideways channel of 1.1400-1.1830 through the upper boundary. In this case, long positions will become relevant.

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 robust 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.

GBP/USD. Price Analysis. Forecast. GBP/USD Falls Below 1.3400

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On Wednesday, GBP/USD fell below the round 1.3400 level as the latest UK inflation report showed a notable decline, ahead of the Bank of England's upcoming monetary policy decision on Thursday.

The pound sterling weakened sharply as the CPI for November revealed an unexpected result: instead of the anticipated increase, it decreased.

The economic situation in the U.S. remains tense as Federal Reserve officials adjust their positions. Fed Chairman Christopher Waller, whom President Donald Trump planned to appoint as Fed Chair, noted that the rate cut had a positive effect on the labor market. He emphasized that inflation is unlikely to rise again, stating that current rates are 50-100 basis points above the neutral level, indicating that immediate rate cuts are unnecessary.

Meanwhile, the consumer price index (CPI) in the UK decreased month-on-month from 0.4% to -0.2%, falling below forecasts. Year-on-year, the CPI fell from 3.6% to 3.2%, missing expectations of a 3.5% decline.

The publication of this data fully accounted for the market's expectations regarding a rate cut by the BoE, resulting in the Bank's rate remaining at 3.75% by the end of the year. For 2026, investors have priced in a 65-basis-point reduction in interest rates.

On Thursday, the U.S. is expected to release CPI data and jobless claims for the week ending December 13. It is forecasted that around 225,000 people will file for unemployment benefits.

From a technical standpoint, the upward or neutral trend for the GBP/USD pair remains intact, but the inflation data have pushed investors down towards the round level of 1.3300 before partially compensating for losses. The RSI (Relative Strength Index) remains bullish, suggesting further growth.

If GBP/USD finishes the day above the round level of 1.3400, a sideways price movement can be expected before the BoE's decision. On the other hand, if the pair stays below the round level of 1.3400, it risks approaching the 200-day moving average, followed by the round level of 1.3300.

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

What is the Updated Power Dynamic between the Euro and the Dollar? Part 2

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In my view, there is only one expectation for the European Central Bank in 2026—tightening. In the most optimistic scenario for the dollar, inflation in the European Union will remain steady around 2%, so there will be no need for monetary policy intervention. Rates will stay at current levels, which will not provide additional support for the European currency. However, the euro continues to dominate the dollar and shows no signs of losing its advantage. The market has not found compelling reasons to begin constructing a downward trend in the last six months, and I really don't think reasons will emerge in 2026.

In the worst-case scenario for the dollar, inflation in the EU could start to accelerate. It wouldn't take much for this to happen. Donald Trump might consider that Europe is again disrespecting the U.S., profiting off it, becoming rich, and taking advantage of the United States. Furthermore, the EU "does not want the war in Ukraine to end" and might impose new sanctions against Russia. These reasons might be sufficient to spark a new escalation of the trade war. Tariffs could rise, along with inflation.

The ECB could also support inflation if it begins printing billions of euros to stimulate an economy that has been stagnant for several years. The ECB might lower rates a few more times to enhance economic stimulus, but in that case, inflation could slow down below 2%. Consequently, it may resort to other methods that will have consequences. However, at present, nothing suggests that the consumer price index will rise in 2026. Therefore, there is no reason to increase interest rates. But while there are no reasons to raise rates in the EU, there are reasons to continue lowering them in the U.S.

In my opinion, the ECB and Fed rates will continue to converge, which is extremely unfavorable for the U.S. dollar. The year 2025 has been very challenging for the dollar, but who said that 2026 will be easier if Trump remains the President of the United States?

Wave Analysis for EUR/USD:

Based on the analysis of EUR/USD, I conclude that the pair continues to build an upward trend segment. Trump's policies and the Fed's monetary policy remain significant factors contributing to the long-term decline of the U.S. dollar. The targets for the current trend segment may reach the 25 figure. The current upward wave structure is beginning to develop, and I hope we are witnessing the construction of an impulsive wave set that is part of the global wave 5. In this case, we should expect growth to reach precisely 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 segment of the trend, 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 indeed the case, I expect the main trend segment to resume its progression with initial targets around the 38 and 40 figures.

In the short term, I anticipated the construction of wave 3 or c with targets located around 1.3280 and 1.3360, corresponding to 76.4% and 61.8% Fibonacci retracements. These targets have been reached. Wave 3 or c continues its development, and the current wave set is beginning to take on an impulsive character. Therefore, we can expect a further increase in quotes 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 change.
2. If there is no confidence in what is happening in the market, it is better not to enter it.
3. There can never be 100% certainty about the direction of movement. Don't 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.

What is the Updated Power Dynamic between the Euro and the Dollar?

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Looking at the movements of the EUR/USD pair in recent months, there is a sense that the market is preparing to sell euros and buy dollars for the long term. Autumn has been very favorable for the U.S. currency. My readers may question what kind of luck I am referring to, since the dollar has experienced only weak demand. In my view, the luck lies in the fact that the market has not begun to sell off the dollar to the same extent as it did in the first half of 2025.

It is worth recalling that the market largely ignored two Federal Reserve rate cuts in the autumn. It also disregarded the looming "shutdown" or the new tariffs imposed by Donald Trump. Therefore, the U.S. dollar could have resumed its decline, but by chance, thanks to market inaction in recent months and its status as a "world reserve currency," it has avoided such a fate. But for how long?

One of the crucial factors influencing EUR/USD pricing for the next year will be the monetary policies of the European Central Bank and the Federal Reserve. I remind you that the last Fed meeting concluded with the third consecutive rate cut, and Jerome Powell indicated the need to wait some time to assess the state of the labor market and the impact of the three rounds of rate cuts. However, when Powell addressed the press, he did not have up-to-date information on inflation, unemployment, and the labor market. The last two reports for November were released on Tuesday this week. The inflation report will come out on Thursday. Therefore, on Thursday, the market will be able to evaluate new perspectives on Fed policy for next year.

Market participants currently do not expect a rate cut in January 2026, but what if the consumer price index slows? It is also essential to understand that the Fed may take a break for only one meeting; thereafter, the FOMC may have to resume the easing cycle if the labor market situation continues as it has for the last 3-4 months. Thus, while the dollar may not need to fear new easing in January, what about beyond that? Especially after May, when Powell steps down and a "Trump appointee" takes his place.

Wave Analysis for EUR/USD:

Based on the analysis of EUR/USD, I conclude that the pair continues to build an upward trend segment. Trump's policies and the Fed's monetary policy remain significant factors contributing to the long-term decline of the U.S. dollar. The targets for the current trend segment may reach the 25 figure. The current upward wave structure is beginning to develop, and I hope we are witnessing the construction of an impulsive wave set that is part of the global wave 5. In this case, we should expect growth to reach precisely 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 segment of the trend, 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 indeed the case, I expect the main trend segment to resume its progression with initial targets around the 38 and 40 figures.

In the short term, I anticipated the construction of wave 3 or c with targets located around 1.3280 and 1.3360, corresponding to 76.4% and 61.8% Fibonacci retracements. These targets have been reached. Wave 3 or c continues its development, and the current wave set is beginning to take on an impulsive character. Therefore, we can expect a further increase in quotes 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 change.
2. If there is no confidence in what is happening in the market, it is better not to enter it.
3. There can never be 100% certainty about the direction of movement. Don't 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.

GBP/USD. The Last Puzzle: UK CPI Report Strengthens Dovish Expectations

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The pound reacted negatively to published data on UK inflation growth. Almost all components of the report were in the "red zone," reflecting a weakening of inflationary pressure.

The significance of this release is hard to overstate, especially considering that on Thursday, December 18, the last Bank of England meeting of the year will take place. There is now no doubt that the central bank will not only lower interest rates but also convey dovish messages, further pressuring the British currency. Under current circumstances, the only thing supporting GBP/USD buyers is the upcoming U.S. CPI report, due on Thursday. If U.S. consumer inflation slows down (against expectations of an increase), the dollar will come under renewed pressure—including against the pound. However, if this report comes in at or above the forecast level (not to mention the "green zone"), the pressure on GBP/USD will likely persist and possibly intensify.

According to data released on Wednesday, the UK's overall consumer price index fell to -0.2% month-on-month (forecast: 0.0%), marking the first negative reading since January this year. This is the lowest value for this indicator since July 2024. Year-on-year, the overall CPI slowed to 3.2%, while most analysts expected it to remain at 3.5%. The figure has decreased for the second consecutive month.

The core consumer price index, excluding energy and food prices, slowed to 3.2% year-on-year in November (the lowest level since December last year), while most analysts expected it to remain at the October level (i.e., 3.4%). In this case, the downward trend is more pronounced as the core CPI has decreased for the fourth consecutive month.

Another inflation indicator—the retail price index—also fell into the red zone. On a month-on-month basis, the figure dropped to -0.5%, updating a two-year low, while year-on-year it fell to 3.8% (this indicator has declined for the fourth consecutive month). The forecasts were set at 0.0% month-on-month and 4.2% year-on-year.

The inflation report has harmoniously complemented the fundamental picture, which is unfavorable to the pound. For instance, UK labor market data also did not support the British currency. Specifically, the unemployment rate rose to 5.1% (the highest level since January 2021), and the number of new jobless claims increased by 20,000 in November—the worst result since July 2024. Meanwhile, the real growth of wages continues to slow down: the main wage indicator (excluding bonuses) decreased to 4.6% year-on-year, its lowest level since June 2022, while including bonuses it fell to 4.7% (the lowest level since June of this year).

The inflation report only added to the one-sided fundamental picture. However, even if this release had come in the "green zone," the baseline scenario for the BoE's December meeting would still have suggested a rate cut. But now, GBP/USD sellers can anticipate a more dovish stance from central bank members.

It should be noted that at the outcome of the November meeting, four (out of nine) members of the Monetary Policy Committee voted for a rate cut. Thus, the option of maintaining the status quo hung by a thread—the fate of the interest rate was decided by the BoE's Governor, Andrew Bailey, who sided with the centrists.

According to forecasts from most analysts, following the December meeting, four MPC members will likely vote to maintain a wait-and-see stance, while five will vote for a rate cut. If the number of "doves" increases, the pound will come under additional pressure. Additionally, the central bank may soften the wording of its accompanying statement. In other words, the central bank might clearly indicate that it will resume monetary policy easing again in the first half of next year. Dovish signals would enable GBP/USD sellers to intensify their pressure on the pair. However, I repeat—only if the U.S. CPI does not negatively impact the dollar.

From a technical perspective, the pair on the four-hour chart is at the middle line of the Bollinger Bands, which coincides with the Tenkan-sen and Kijun-sen lines, and is also above the Kumo cloud. On the daily chart, it is positioned between the middle and upper lines of the Bollinger Bands, but below the Tenkan-sen line and within the Kumo cloud. All this suggests a lack of clear technical signals—neither bullish nor bearish. Short positions should only be considered when the pair consolidates below the support level of 1.3330 (the lower Bollinger Bands line on the H4 timeframe).

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

The Euro Comes Down to Earth

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The market bought the rumor and sold the fact, while the worsening outlook for the German economy acted as a catalyst for the EUR/USD pullback. Moreover, the situation in Ukraine remains unresolved. U.S. employment figures are disappointing, with the unemployment rate rising to 4.6%. Overall, the BLS report gives the Federal Reserve a reason to sit back and observe how events unfold. This allowed traders to take profits on their long positions in the euro.

U.S. Non-Farm Employment Dynamics

The U.S. labor market continues to cool, with consumers refraining from excessive spending, as evidenced by retail sales data. American purchasing managers' indices also leave much to be desired. There is a visible deterioration in the U.S. economy. The narrowing gap between the U.S. economy and its European counterpart played in favor of the EUR/USD bulls—if only all were calm in the EU.

Unfortunately, the decline in business confidence in Germany indicates that the peace of the euro is a mere fantasy. The IFO index expectations fell from 90.5 to 89.7, while the current conditions measure remained unchanged. Companies in Germany are more pessimistic about the first half of 2026. The coming year will start for the eurozone's leading economy without much optimism.

Dynamics of German Business Confidence

The European Central Bank will surely take this fact into account at its December meeting. However, unlike other central banks, it has something to boast about. Inflation is considered securely anchored near 2%, and the economy has adapted to U.S. tariffs. Investors assess the cycle of monetary expansion as complete, with no changes to the deposit rate expected until 2027. The odds of an increase from the current 2% level are higher than the likelihood of a decrease.

At the same time, the EUR/USD response to U.S. employment data has allowed the ECB to relax. The euro did not strengthen, meaning there will be no slowdown in inflation in the eurozone. Christine Lagarde can set aside the idea of verbal interventions and focus on monetary policy.

While all remains stable in Europe, the future of EUR/USD depends on events occurring in the United States. After the labor market data, investor attention has shifted to U.S. inflation data. An acceleration in inflation would become a serious trump card for the FOMC "hawks" and would allow the U.S. dollar to continue its advance against major world currencies, with the euro being no exception.

Goldman Sachs expects consumer prices in the United States to slow down from 3% to 2.9%. Inflation is still too high for the Fed to rest on its laurels like the ECB. The further dynamics of inflation will affect the futures market's chances for a federal funds rate cut.

Technically, the daily chart of EUR/USD shows the formation of a pin bar with a long upper shadow, indicating weakness among the bulls. As long as prices remain below the low of this bar at 1.1735, it makes sense to consider short-term selling.

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

What's Next for the Federal Reserve?

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The recent economic reports from the U.S. labor market hit like a thunderbolt. I'm not saying that most market participants expected positive numbers; rather, the opposite. I had warned that it would be extremely difficult to expect positive outcomes from the U.S. labor market even after three rounds of monetary policy easing. However, the labor market data for October and November surprised with their weakness.

To summarize, the unemployment rate jumped to 4.6% in November. The Nonfarm Payrolls for October were -105,000, and for November, they were 60,000. If we sum all the values, including the upward revision of the September figure, it's not so bad. However, in my opinion, the key figure is the unemployment rate. It has been rising since April 2023, when it reached a low of 3.4%.

All this information is interesting in itself and suggests further weakening of the U.S. dollar. However, as I mentioned, it will have long-term consequences. Firstly, it's now clear that the FOMC committee didn't ease policy "blindly" in December for no reason. Secondly, the November payroll figure shows recovery, but it's still too weak to consider the task of blocking further "cooling" of the U.S. labor market accomplished. Thirdly, the Fed may have to continue lowering interest rates in January 2026.

I would like to remind you that last week, Jerome Powell mentioned a potential pause early next year. I now doubt this pause. Before the labor market reports were released, futures markets assessed the probability of easing in January at 20%. Now, according to the CME FedWatch Tool, that probability has risen to 77%. Hence, we may be expecting another round of policy easing in January.

This week (on Thursday), another inflation report will be released, likely providing insight into what to expect from the FOMC in January. If inflation decreases from its current 3%, the likelihood of a new round of easing will grow even stronger. Demand for the U.S. dollar will continue to decline. If inflation accelerates, then the January meeting will become a battle between the "hawks" and the "doves." The Fed is becoming increasingly mired in a swamp. Balancing between inflation and unemployment is becoming more difficult every day.

Wave Analysis for EUR/USD:

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

Wave Analysis for GBP/USD:

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

In the short term, I anticipated the construction of wave 3 or c, with targets near 1.3280 and 1.3360, corresponding to 76.4% and 61.8% Fibonacci retracements. These targets have been reached. Wave 3 or c continues to develop, and the current wave set is beginning to take an impulsive form. Consequently, we can expect an ongoing increase in quotes 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 change.
2. If there is no confidence in what is happening in the market, it is better not to enter it.
3. There can never be 100% certainty about the direction of movement. Don't 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.

What to Expect from the BoE?

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Tuesday was incredibly interesting. Traders received a massive amount of important information that affects currency market movements. But not only that; it also impacts the long-term plans and prospects of the Bank of England (BoE) and the Federal Reserve (Fed). In this review, we will look at what has changed for the British central bank just two days before its final meeting of the year.

Among all the UK reports released on Tuesday morning, I can highlight two reports: the unemployment rate and the change in average hourly earnings. The unemployment situation is relatively straightforward. The rate rose to 5.1% year-on-year, but Andrew Bailey mentioned back in the summer that unemployment would continue to rise and reach a peak of around 5.4%. Therefore, everything is going according to the script "approved" by the BoE. It is also noteworthy that the market was not caught off guard by the rise in unemployment, as the 5.1% figure was precisely what was expected. Based on this report, I can draw the following conclusions: unemployment is rising in line with expectations; this is bad, but it was anticipated; the BoE still needs to consider easing monetary policy to stimulate the labor market. So, it seems that nothing has changed for the BoE on Tuesday? Not quite.

Average hourly earnings rose by 4.7% in October, which is much higher than market expectations (4.4%). Consequently, wage growth rates in the UK remain high, and the BoE (I remind you) has repeatedly linked a slowdown in inflation to a decline in wage growth. This suggests that wages could drive both overall and core inflation. If inflation starts to rise again, the BoE will find itself in the same position as the Fed: rising unemployment and rising inflation.

However, on Wednesday morning, the infamous UK inflation report was released, relieving tension among market participants. The Consumer Price Index dropped to 3.2% year-on-year, effectively giving the "green light" for a rate cut on Thursday. Yet, it is important to note that the wage report was published for October, while the inflation report is for November. If the consumer price index slows for two consecutive months, it doesn't mean it will keep declining.

Wave Analysis for EUR/USD:

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

Wave Analysis for GBP/USD:

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

In the short term, I anticipated the construction of wave 3 or c, with targets near 1.3280 and 1.3360, corresponding to 76.4% and 61.8% Fibonacci retracements. These targets have been reached. Wave 3 or c continues to develop, and the current wave set is beginning to take an impulsive form. Consequently, we can expect an ongoing increase in quotes 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 change.
2. If there is no confidence in what is happening in the market, it is better not to enter it.
3. There can never be 100% certainty about the direction of movement. Don't 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. ECB December Meeting: Preview

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On December 18, the last European Central Bank meeting of the year will occur. The formal outcomes of the December meeting are likely predetermined—the central bank will almost certainly maintain all monetary policy parameters as they are. However, this is by no means a "routine" meeting. The intrigue continues regarding the ECB's future actions, especially given the ongoing strengthening of the euro. The question of interest rate cuts has not been removed from the agenda—at least, in the context of the first half of 2026.

According to the baseline scenario, the ECB will remain in a wait-and-see position not only at the December meeting but also at the beginning of the next year, at least until March. However, market participants are anxiously watching the EUR/USD pair, which is currently trading around the 17-18 figures. If the upward momentum continues, "dovish" expectations regarding the ECB will rise significantly.

It is important to recall the July statement by ECB Vice President Luis de Guindos, who noted that an EUR/USD rate above the target of 1.20 "would create significant difficulties for the economy and affect the ECB's decision on interest rate cuts, as a strong euro makes European goods more expensive" (against the backdrop of an influx of cheap Chinese goods). At the time, evaluating the situation (which refers to July this year), he emphasized that he saw no reason for concern regarding the current EUR/USD rate.

Remarkably, in July, the EUR/USD pair was trading within the same range as it is now. However, it failed to reach the 20 figure—after updating the monthly high at 1.1830, the pair turned south and finished July at 1.1415. Guindos's comments lost their relevance and were forgotten, as the saying goes, "until the time comes."

Against the backdrop of a general weakening of the dollar, the pair hit a nearly three-month high on Tuesday, rising to 1.1805. After that, the market once again began discussing the ECB Vice President's warnings. Essentially, in July, he signaled a potential easing of monetary policy if the euro continued to strengthen. According to estimates from several analysts (including ING economists), further strengthening of the European currency by at least 5% could trigger a reduction in interest rates.

If the central bank's members express similar signals at the end of the December meeting, the EUR/USD pair will come under significant pressure.

However, there are also opposing—hawkish—forecasts in the market that carry considerable weight. The main argument is a recent statement by ECB board member Isabel Schnabel, indicating that the next step for the central bank could be an interest rate hike. Although she made several caveats (notably, that any potential tightening of monetary policy may not occur in the near future), this statement sounded like thunder in a clear sky. The market is now considering a rate hike, a scenario that had not previously been part of the discussion. Justifying her position, Schnabel pointed to the recovery of the eurozone economy, the expansion of fiscal policies, and the stagnation of core inflation.

Indeed, the European economy is showing weak yet positive growth, according to final third-quarter data. The quarterly figure was unexpectedly revised upward: it was initially reported that the eurozone economy grew by 0.2%, but final data shows that GDP increased by 0.3%. On a year-over-year basis, the figure remained at the initial level of 1.4%. Consumer spending in the eurozone rose by 0.2% quarter-on-quarter, gross fixed capital formation increased by 0.9%, and government spending rose by 0.7%. Imports grew by 1.3%, and exports increased by 0.7%.

It is also noteworthy to mention the rise in employment. For the third quarter, employment grew by 0.2% quarter-on-quarter (against a forecast of 0.1%), following a 0.1% increase in the previous quarter. On a year-over-year basis, the figure rose by 0.6%, after a 0.5% increase in the previous quarter.

As for inflation, it is difficult not to agree with Schnabel: the core consumer price index stagnated at 2.4%. The overall CPI has remained at 2.1% for two consecutive months (according to the final data for November).

Thus, on one side of the scale is the threat of a "strong euro," while on the other are fundamental factors that allow the ECB to not only maintain a wait-and-see stance but also consider raising interest rates.

In my opinion, the central bank will keep all monetary policy parameters unchanged and adopt a "moderately hawkish" rhetoric, emphasizing a wait-and-see stance. Such an outcome (the absence of "dovish hints") may be interpreted by traders as favorable for the euro, as there will be two options on the table: maintaining the status quo (the baseline scenario) and interest rate hikes (an acceptable option).

At this time, any trading positions on the EUR/USD pair are risky. And this is not only due to the ongoing intrigue regarding the outcomes of the December ECB meeting. Trader attention is also focused on the U.S. CPI, with the October figure to be revealed on Thursday, immediately after the results of the December meeting are announced. If inflation in the U.S. slows down (or at least meets expectations), and the ECB adopts a "moderately hawkish scenario," the EUR/USD pair will likely attempt to revisit the 18 figure area. Conversely, if the CPI accelerates and the ECB signals dovish tones, the pair will most likely return to the range of 1.1630 – 1.1690 (the middle line of Bollinger Bands—the upper boundary of the Kumo cloud on D1).

The intrigue remains, so it is advisable to maintain a wait-and-see position regarding the pair.

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

Gold Aims for Record Highs

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Troubles seldom come alone. Joy seems to come in packs as well. The Federal Reserve's rate cuts, geopolitical tensions, and the slowdown in global economic growth have intertwined to help gold shine once more. When the precious metal fell from its record highs in October, rumors spread that a return would take years. However, in reality, XAU/USD could set a new historical peak even before the end of 2025.

Gold is heading toward its best annual result since 1979. Back then, its prices surged by 127% as the White House pressured the Fed to lower rates. A similar picture is emerging now. Donald Trump is demanding that the central bank lower borrowing costs to 1% or lower. To achieve this, the White House intends to change the composition of the FOMC, starting from the top—with a new chairman.

Annual Dynamics of Gold

So far, the reports from the U.S. labor market have left a mixed impression. The rise in unemployment to a four-year high, combined with a decrease of over 100,000 in non-farm employment in October, contrasts with strong figures for November. The futures market does not see a continuation of the Fed's monetary expansion cycle in January, and the chances of it happening in March are seen as fifty-fifty.

Nevertheless, the reluctance of retail sales to grow, along with disappointing business activity data, indicates that not everything is well with the U.S. economy. Its slowdown is a strong argument for further cuts in the federal funds rate, which would favor XAU/USD.

Dynamics of U.S. Labor Market Indicators

Gold is also supported by geopolitics. Donald Trump's order to block sanctioned tankers heading to and from Venezuela increases investor demand for safe-haven assets.

Goldman Sachs maintains its forecast for the precious metal's price to reach $4,900 per ounce by 2026, citing central banks' insatiable appetite for gold bars. The firm continues to project its average monthly purchases at 70 tons, significantly above historical averages. According to BNP Paribas, gold is expected to rise to $5,000. This will be supported by a correction in the U.S. stock market, a slowdown in global GDP, and heightened inflationary pressures.

In my view, a prolonged pause in the Fed's monetary easing cycle will strengthen the dollar and raise yields on U.S. Treasury bonds. This environment is unfavorable for the precious metal, and its rally potential is limited. Moreover, the conclusion of the armed conflict in Ukraine will slow down active bar purchases by central banks as part of their reserve diversification process.

Technically, on the daily chart, gold is experiencing its fourth test of resistance at the pivot level of $4,333 per ounce. The success of the bulls in this endeavor will allow for the increase of long positions formed from $4,265. Conversely, failure will serve as a reason to sell the precious metal.

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

GBP/USD Analysis on December 18, 2025

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For GBP/USD, the wave structure continues to indicate the formation of a bullish trend segment (bottom chart), but over the past six months it has taken on a complex and extended form (top chart). The trend segment that began on July 1 can be considered wave 4, or any global 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 has taken the form of a five-wave a–b–c–d–e pattern and has been completed. The instrument is now in the process of forming a new bullish wave sequence.

Of course, any wave structure can become more complex and extended at any moment. Even the presumed wave 4, which has been developing for six months, could take on a five-wave form, in which case we would observe a correction for several more months. However, at the moment, there is a strong chance that a bullish wave sequence is forming. If this is indeed the case, the first two waves of this segment have already been completed, and we are now observing the construction of wave 3 or C, which is taking on an impulsive character and gives hope that the current wave sequence will also be impulsive.

During Wednesday, GBP/USD fell by 60–70 basis points, although intraday losses were much deeper. The rebound from the intraday lows in the second half of the day is encouraging. The fact that the market quickly bought back the dip suggests there is no strong desire to sell the British pound. In my view, there have been no additional reasons this week to sell the British currency.

Unfortunately, inflation in the UK slowed to 3.2% (both headline and core), so the outcome of tomorrow's Bank of England meeting can already be considered largely predetermined. Today's UK inflation report was, by and large, the only truly interesting event. By pricing in this report, the market has effectively also priced in tomorrow's BoE rate cut. Of course, Thursday will not be limited to the interest rate decision alone, and the BoE meeting will not be the only event scheduled. There will once again be plenty of important developments, not least the U.S. inflation report, which is even more important than the UK data. Nevertheless, the market has already drawn its main conclusion regarding the BoE meeting—and has already acted on it.

Despite the pullback from this week's highs, I expect the bullish wave sequence to continue forming. However, I would like to remind you that this week features a strong news backdrop both in the UK and in the U.S., which does not happen very often. Therefore, it is best to make forecasts for the coming weeks on Friday or over the weekend, when the full picture of the market's reaction to the news will be clearer.

Overall Conclusions

The wave picture for GBP/USD has changed. We are still dealing with a bullish, 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, with initial targets around the 3.8000 and 4.0000 levels.

In the short term, I expected the formation of wave 3 or C with targets 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 C continues to develop, and the current wave sequence is beginning to take on an impulsive character. Consequently, further price appreciation can be expected, with targets around 1.3580 and 1.3630.

The higher-timeframe wave structure looks almost ideal, even though wave 4 moved above the high of wave 1. However, I would like to remind you that perfect wave structures exist only in textbooks. In practice, everything is much more complex. At this time, I see no reason to consider alternative scenarios to the bullish trend segment.

Key Principles of My Analysis:

1. Wave structures should be simple and easy to understand. 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.
3. There is never—and cannot be—100% certainty about price direction. Do not forget 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 Analysis on December 18, 2025

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The wave pattern on the 4-hour chart for EUR/USD has transformed, but overall it still remains quite clear. There is no talk of canceling the bullish trend segment that began in January 2025; however, the wave structure since July 1 has taken on a complex and extended form. In my view, the instrument has completed the construction of corrective wave 4, which turned out to be highly unconventional. Within this wave, we observed exclusively corrective structures, leaving no doubt about the corrective nature of the decline.

In my opinion, the construction of the bullish trend segment has not been completed, and its targets may extend as far as the 2.5000 level. The series of waves a–b–c–d–e appears complete; therefore, I expect the formation of a new bullish 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 C. I expected this wave to push the instrument up to the 1.1717 level, which corresponds to the 38.2% Fibonacci retracement; however, this wave is becoming more extended, which is very positive, as it may turn into an impulsive wave—along with the entire bullish wave sequence.

During Wednesday, the EUR/USD pair began to lose market support. The single European currency declined by about 60 basis points from yesterday's highs. However, in my view, this decline does not even deserve minimal attention. As shown in the chart above, such pullbacks occur regularly. The internal wave structure of the presumed wave 3 or C does not look textbook-like. Even now, more than five waves can be identified within it, suggesting that it may become quite extended. Accordingly, this wave may continue to develop, and today's decline is merely a corrective pullback.

Tomorrow, the ECB will hold its final meeting of the year. The rate decision is already known—no changes are expected. However, market participants are highly interested in the answer to the following question: what actions will the European regulator take in the first half of 2026? If inflation continues to rise gradually, as it has in recent months, the ECB may take preventive measures and carry out one round of monetary policy tightening. However, such decisions will depend solely on inflation. Therefore, I do not expect Christine Lagarde and her colleagues to announce rate hikes for next year tomorrow.

And what about inflation? As of November, the Consumer Price Index remained unchanged at 2.1% year-on-year. Consequently, at this moment the ECB does not even need to consider raising interest rates next year. I believe the outcome of the ECB meeting will be extremely uneventful, and the market will show little to no reaction to this event.

Overall Conclusions

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

On a smaller scale, the entire bullish trend segment is clearly visible. The wave structure is not entirely standard, as corrective waves vary 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 strictly adhering to every individual wave. At present, the bullish structure raises no doubts.

Key Principles of My Analysis:

1. Wave structures should be simple and easy to understand. 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.
3. There is never—and cannot be—100% certainty about price direction. Do not forget 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.

USD/JPY: Tips for Beginner Traders on December 17th (U.S. Session)

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Trade Analysis and Advice for Trading the Japanese Yen

The price test at 155.40 occurred when the MACD indicator had moved far above the zero line, which limited the pair's upward potential. The second test of 155.40 triggered Scenario #2 for selling the dollar, but a major drop in the pair did not occur.

During the U.S. session, attention will focus on speeches by two members of the Federal Open Market Committee—John Williams and Raphael Bostic. If their statements lean toward dovish monetary policy, pressure on the U.S. dollar is expected to resume. Conversely, if the Fed's rhetoric is tighter following yesterday's labor market data, the dollar may gain momentum, potentially triggering another wave of USD/JPY strength. However, when buying the dollar and selling the yen, keep in mind that the Bank of Japan will raise interest rates the following day, which could instantly shift market sentiment.

For intraday strategy, I will mainly rely on Scenarios #1 and #2.

Buy Signal

Scenario #1: I plan to buy USD/JPY today around the entry point of 155.61 (green line on the chart) with a target of 156.09 (thicker green line on the chart). Around 156.09, I will exit purchases and open sales in the opposite direction (expecting a 30–35 point move from the level). Growth in the pair can only be expected after a hawkish Fed stance. Important: Before buying, ensure the MACD is above zero and just beginning to rise.

Scenario #2: I also plan to buy USD/JPY if the price tests 155.40 twice consecutively while the MACD is in the oversold zone. This limits downward potential and should trigger a market reversal upward. Expected targets are 155.61 and 156.09.

Sell Signal

Scenario #1: I plan to sell USD/JPY after the pair breaks 155.40 (red line on the chart), which will trigger a rapid drop. The key target for sellers is 155.14, where I will exit sales and immediately open purchases in the opposite direction (expecting a 20–25 point move from the level). Selling pressure on the pair will only resume if the Fed takes a dovish stance. Important: Before selling, ensure the MACD is below zero and just beginning to decline.

Scenario #2: I also plan to sell USD/JPY if the price tests 155.61 twice consecutively while the MACD is in the overbought zone. This limits upward potential and should trigger a market reversal downward. Expected targets are 155.40 and 155.14.

Chart Explanation

• Thin green line: Entry price for buying the instrument.
• Thick green line: Suggested Take Profit or level to secure profits, as further growth above this point is unlikely.
• Thin red line: Entry price for selling the instrument.
• Thick red line: Suggested Take Profit or level to secure profits, as further decline below this point is unlikely.
• MACD indicator: Use overbought and oversold zones when entering trades.

Important. Beginner Forex traders need to make their entry decisions very carefully. Before the release of important fundamental reports, it is best to stay out of the market to avoid falling into sharp fluctuations in the exchange rate. If you decide to trade during the news release, always place stop orders to minimize losses. Without placing stop orders, you can lose your entire deposit very quickly, especially if you do not use money management, but trade in large volumes.

And remember that for successful trading it is necessary to have a clear trading plan, following the example of the one I presented above. Spontaneous trading decision-making based on the current market situation is an inherently 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 17th (U.S. Session)

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Trade Analysis and Advice for Trading the British Pound

The price test at 1.3370 occurred when the MACD indicator had moved far below the zero line, which limited the pair's downward potential. For this reason, I did not sell the pound and missed the strong drop.

News that the UK Consumer Price Index fell by 0.2% in November caused the pound to weaken. Weaker-than-expected inflation heightened concerns about slowing economic growth in the country and potential pressure on the Bank of England to ease monetary policy. Investors seeking higher returns began selling pounds, switching to assets offering more attractive prospects.

During the U.S. session, attention will focus on speeches by FOMC members. If they adopt a dovish stance, pressure on the dollar will ease. Otherwise, if the Fed's rhetoric is more cautious, the dollar may gain support, potentially triggering a new wave of GBP/USD declines—especially ahead of tomorrow's Bank of England monetary policy meeting.

For intraday strategy, I will mainly rely on Scenarios #1 and #2.

Buy Signal

Scenario #1: I plan to buy the pound today around the entry point of 1.3336 (green line on the chart) with a target of 1.3354 (thicker green line on the chart). Around 1.3354, I will exit purchases and open sales in the opposite direction (expecting a 30–35 point move from the level). Growth in the pound today can only be expected after a dovish stance from the Fed. Important: Before buying, ensure the MACD indicator is above zero and just beginning to rise.

Scenario #2: I also plan to buy the pound if the price tests 1.3320 twice consecutively while the MACD is in the oversold zone. This limits downward potential and should trigger a market reversal upward. Expected targets are 1.3336 and 1.3354.

Sell Signal

Scenario #1: I plan to sell the pound after it breaks 1.3320 (red line on the chart), which will trigger a rapid drop. The key target for sellers is 1.3295, where I will exit sales and immediately open purchases in the opposite direction (expecting a 20–25 point move from the level). Selling pressure on the pound can return at any time. Important: Before selling, ensure the MACD is below zero and just beginning to decline.

Scenario #2: I also plan to sell the pound if the price tests 1.3336 twice consecutively while the MACD is in the overbought zone. This limits upward potential and should trigger a market reversal downward. Expected targets are 1.3320 and 1.3295.

Chart Explanation

• Thin green line: Entry price for buying the instrument.
• Thick green line: Suggested Take Profit or level to secure profits, as further growth above this point is unlikely.
• Thin red line: Entry price for selling the instrument.
• Thick red line: Suggested Take Profit or level to secure profits, as further decline below this point is unlikely.
• MACD indicator: Use overbought and oversold zones when entering trades.

Important. Beginner Forex traders need to make their entry decisions very carefully. Before the release of important fundamental reports, it is best to stay out of the market to avoid falling into sharp fluctuations in the exchange rate. If you decide to trade during the news release, always place stop orders to minimize losses. Without placing stop orders, you can lose your entire deposit very quickly, especially if you do not use money management, but trade in large volumes.

And remember that for successful trading it is necessary to have a clear trading plan, following the example of the one I presented above. Spontaneous trading decision-making based on the current market situation is an inherently 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 17th (U.S. Session)

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Trade Analysis and Advice for Trading the Euro

The price test at 1.1715 occurred at a moment when the MACD indicator had moved far below the zero line, which limited the pair's downward potential. For this reason, I did not sell the euro.

The euro weakened in the first half of the day mainly due to disappointing IFO data from Germany and slowing inflation in the eurozone. The IFO index, an important barometer of the German economy, again failed to meet expectations, signaling a continued downturn in industry and restrained future expectations. Additional pressure came from eurozone inflation data, which showed a greater-than-expected slowdown in consumer price growth. Together, these factors heightened investor concerns about the state of Germany's economy—the largest in Europe—and the possibility of further monetary easing by the European Central Bank.

During today's U.S. trading session, special attention will be paid to speeches by John Williams and Raphael Bostic, members of the Federal Open Market Committee (FOMC). Market participants will focus on looking for signs of a likely adjustment by the Fed regarding further interest rate cuts. Traders will try to determine whether the latest labor market data will prompt a more cautious approach to monetary easing. If so, the dollar could strengthen even further.

For intraday strategy, I will mainly rely on Scenarios #1 and #2.

Buy Signal

Scenario #1: Buy euros today around 1.1730 (green line on the chart) with a target of 1.1762. At 1.1762, I plan to exit the market, also selling euros in the opposite direction for a 30–35 point move from the entry point. Significant euro growth can be expected only after a dovish stance from the Fed. Important: Before buying, ensure that the MACD indicator is above the zero line and just beginning to rise from it.

Scenario #2: I also plan to buy euros if the price tests 1.1711 twice consecutively while the MACD indicator is in the oversold area. This limits the pair's downward potential and should trigger a market reversal upward. Expected targets are 1.1730 and 1.1762.

Sell Signal

Scenario #1: Sell euros after reaching 1.1711 (red line on the chart). The target is 1.1681, where I plan to exit the market and immediately buy in the opposite direction (expecting a 20–25 point move back from this level). Selling pressure will return only if the Fed takes a hawkish stance. Important: Before selling, ensure that the MACD indicator is below the zero line and just beginning to decline from it.

Scenario #2: I also plan to sell euros if the price tests 1.1730 twice consecutively while the MACD indicator is in the overbought area. This limits the pair's upward potential and should trigger a market reversal downward. Expected targets are 1.1711 and 1.1681.

What the Chart Shows

• Thin green line: Entry price for buying the instrument.
• Thick green line: Suggested Take Profit or level to secure profits, as further growth beyond this point is unlikely.
• Thin red line: Entry price for selling the instrument.
• Thick red line: Suggested Take Profit or level to secure profits, as further decline below this point is unlikely.
• MACD indicator: Use overbought and oversold zones when entering trades.

Important. Beginning traders in the Forex market must be very cautious when making decisions about entering the market. It's best to stay out of the market before the release of important fundamental reports to avoid getting caught in sharp price fluctuations. If you decide to trade during news releases, always place stop orders to minimize losses. Without setting stop orders, you can quickly lose your entire deposit, especially if you are not using money management strategies and are trading large volumes.

And remember that for successful trading, it is essential to have a clear trading plan, similar to the one I presented above. Spontaneous trading decisions based on the current market situation are inherently a losing strategy for day traders.

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

GBP/USD Analysis on December 17, 2025

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For GBP/USD, the wave count continues to indicate the construction of an upward trend segment (see bottom chart), but over the past few weeks it has taken on a more complex and extended form (see top chart). The trend segment starting on July 1 can be considered wave 4, or any global corrective wave, as it clearly has a corrective rather than impulsive internal wave structure. The same applies to its internal subwaves. The downward wave structure starting on September 17 took on a five-wave form (a–b–c–d–e) and is now complete. The pair is currently 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 assumed wave 4, which has been forming for six months, could take on a five-wave form, in which case we would observe the correction for several more months. However, at this time, the instrument has every chance of forming a bullish wave sequence. If this is indeed the case, the first two waves of this segment are already complete, and we are now observing the construction of wave 3 or c, which appears impulsive and suggests an impulsive character for the current wave sequence.

The GBP/USD rate rose by 70 basis points on Tuesday and has the potential to rise much further. From Tuesday's results, two key conclusions can be drawn:

1. The Fed may not pause its monetary easing in the first quarters of 2026.
2. The Bank of England will likely cut interest rates tomorrow with almost 100% probability.

However, the pound should not be too pessimistic. The market had already expected a new round of easing in December, and Andrew Bailey had mentioned four potential rate cuts earlier this year.

In short (with a more detailed review of economic data to follow), the UK unemployment rate is rising but remains within forecasts. Meanwhile, wage growth is accelerating, which could potentially reignite inflation—something the Bank of England has struggled to control over the past five months. Inflation has fallen for two consecutive months, giving the Bank of England room to continue cutting rates. Similarly, with the latest U.S. labor market data, the Fed can continue easing.

U.S. statistics could fill five full reviews to cover them thoroughly. In short, all labor market and unemployment reports were disappointing. Therefore, any decline in GBP/USD may be very short-lived.

Overall Conclusions

The GBP/USD wave picture has evolved. We are still dealing 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 is complete, as is the entirety of wave 4. If this is indeed the case, I expect the main trend segment to resume its construction, with initial targets around the 38- and 40-figure levels.

In the short term, I expected the construction of wave 3 or c with targets around 1.3280 and 1.3360, corresponding to 76.4% and 61.8% Fibonacci retracement levels. These targets have been reached. Wave 3 or c continues to form, and the current wave sequence is beginning to take on an impulsive character. Consequently, we can expect a continuation of the upward movement, with targets around 1.3580 and 1.3630.

The wave count on the higher timeframe looks almost perfect, even though wave 4 has slightly surpassed the maximum of wave 1. However, it should be noted that "perfect" wave counts exist only in textbooks; in practice, things are much more complex. At this time, I see no reason to consider alternative scenarios for the bullish trend segment.

Key Principles of My Analysis

1. Wave structures should be simple and understandable. Complex structures are difficult to trade and often indicate change.
2. If you are not confident in what is happening in the market, it is better not to enter.
3. There is no 100% certainty in market direction, and there never will be. Always 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.

Level and Target Adjustments for the U.S. Session – December 17th

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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.

Weak IFO data from Germany and a decline in eurozone inflation limited the euro's upward potential. The British pound, however, was hit much harder after news that prices fell in November instead of rising, which led to a sharp decline in GBP/USD. During the U.S. session, the focus will be on speeches by FOMC member John Williams and FOMC member Raphael Bostic. It will be quite interesting to see how they comment on yesterday's U.S. labor market data and what tone they take toward tomorrow's inflation figures.

Traders will closely watch for any hints of a possible change in the Fed's rhetoric regarding the outlook for interest rates. Uncertainty surrounding inflation on the one hand, and signs of a slowing labor market on the other, place the regulator in a difficult dilemma. The market is waiting to see whether FOMC representatives will interpret the recent labor market data as a reason for a more cautious approach to easing monetary policy. Given that the labor market is traditionally a key factor in the Fed's interest-rate decisions, comments from Williams and Bostic could have a significant impact on investor sentiment and movements in the currency market.

In the case of strong data, I will rely on implementing the Momentum strategy. If there is no market reaction to the data, I will continue using the Mean Reversion strategy.

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

For EUR/USD

• Buying on a breakout above 1.1725 could lead to a rise toward 1.1750 and 1.1775;
• Selling on a breakout below 1.1705 could lead to a decline toward 1.1680 and 1.1640.

For GBP/USD

• Buying on a breakout above 1.3335 could lead to a rise toward 1.3360 and 1.3385;
• Selling on a breakout below 1.3315 could lead to a decline toward 1.3285 and 1.3260.

For USD/JPY

• Buying on a breakout above 155.65 could lead to a rise toward 156.15 and 156.55;
• Selling on a breakout below 155.40 could lead to selling pressure toward 155.20 and 154.80.

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

For EUR/USD

• I will look for sell opportunities after a failed break above 1.1740, followed by a move back below this level;
• I will look for buy opportunities after a failed break below 1.1692, followed by a return to this level.

For GBP/USD

• I will look for sell opportunities after a failed break above 1.3350, followed by a move back below this level;
• I will look for buy opportunities after a failed break below 1.3275, followed by a return to this level.

For AUD/USD

• I will look for sell opportunities after a failed break above 0.6633, followed by a move back below this level;
• I will look for buy opportunities after a failed break below 0.6610, followed by a return to this level.

For USD/CAD

• I will look for sell opportunities after a failed break above 1.3789, followed by a move back below this level;
• I will look for buy opportunities after a failed break below 1.3760, followed by a return to this level.

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

EUR/USD Analysis on December 17, 2025

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The wave count 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 segment of the trend that began in January 2025; however, the wave structure since July 1 has taken on a complex and extended form. In my view, the instrument has completed the construction of corrective wave 4, which has taken on a very non-standard 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 25th figure. The series of waves a–b–c–d–e looks complete; therefore, over the coming weeks I expect the formation of a new bullish wave sequence. 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 that within this wave the instrument would rise to the 1.1717 level, which corresponds to the 38.2% Fibonacci retracement. However, this wave is taking on a more extended form, which is very positive, as it may turn out to be impulsive—along with the entire bullish wave sequence.

The EUR/USD exchange rate continued to rise throughout Tuesday, and again, there is no need to look for an explanation. While during the European session the market had fairly specific reasons to sell the euro, during the U.S. session it had reasons only to sell the dollar. Economic data from the eurozone were certainly interesting, but in the United States, labor market and unemployment data were released that the market had been eager to see for more than two months. Moreover, let me remind you that the Federal Reserve once again made its rate decision "blindly" last week. It is now becoming clear that cutting interest rates for the third time was an absolutely correct decision. The U.S. labor market continues to "cool," and that is putting it very mildly. We will discuss the impact of economic data on the outlook for Fed monetary policy in a separate review; here, I will keep it brief.

The EUR/USD pair continues to build a bullish wave sequence. Yesterday's news background could have disrupted the wave count, but this did not happen, as the most important reports of the day turned out to be extremely negative for the U.S. dollar. Overall, I can focus readers' attention on just one report—the unemployment rate. This indicator rose to 4.6% in November, something few expected. What difference does it make how many new jobs were created if the unemployment rate jumped by 0.2% at once? Whether 500,000 or any other number is irrelevant. That said, the payrolls reports for October and November also contributed to the dollar's decline. The October report was so poor that the November figures no longer mattered much to market participants.

Overall Conclusions

Based on this EUR/USD analysis, I conclude that the instrument continues to build an upward trend segment. Donald Trump's policies and the Federal Reserve's monetary policy remain significant long-term factors weighing on the U.S. dollar. The targets of the current trend segment may extend as far as the 25th figure. The current bullish wave sequence is beginning to gain traction, and one would like to believe that we are now witnessing the formation of an impulsive wave structure as part of the global wave 5. In this case, growth toward the 25th figure should be expected, as I have mentioned before.

On a smaller scale, the entire upward trend segment is visible. The wave count is not entirely standard, as corrective waves differ in size. For example, the larger wave 2 is smaller than the internal wave 2 within wave 3. However, this does happen. Let me remind you that it is best to identify clear and understandable structures on charts, rather than rigidly attaching to every single wave. At present, the bullish structure raises no doubts.

Key Principles of My Analysis

1. Wave structures should be simple and easy to understand. 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 not to enter it.
3. There is no such thing as 100% certainty about market direction, and there never will be. Do not forget 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.

Forex forecast 17/12/2025: EUR/USD, USD/JPY, GBP/USD, USDX, 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

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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

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EUR/USD. Analysis and Forecast

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The EUR/USD pair is stabilizing near the round 1.1700 level and appears to have halted the sharp decline seen the previous day. At the same time, the fundamental backdrop remains favorable for the bulls, suggesting that the path of least resistance for spot prices remains to the upside.The U.S. dollar gained momentum after the release of November Nonfarm Payrolls (NFP) data, which showed the smallest job creation figure since early October. This occurred against the backdrop of the Federal Reserve's accommodative monetary policy, which is providing support to the EUR/USD pair. According to the U.S. Bureau of Labor Statistics (BLS), the economy added just 64,000 jobs in November, compared with analysts' expectations of 50,000, while October recorded a decline of 105,000 jobs. The unemployment rate also rose to 4.6% from 4.4% in the previous month.

Despite these mixed figures, markets continue to expect the Federal Reserve to cut interest rates at least two more times next year. Expectations of a dovish stance are also being reinforced by reports of a possible change in leadership at the Federal Reserve. A Wall Street Journal article notes that U.S. President Donald Trump plans to meet with candidates for the Fed chair position, including current Governor Christopher Waller, as well as other contenders such as National Economic Council Director Kevin Hassett and former Fed Governor Kevin Warsh.

On the other hand, the euro continues to receive support amid growing confidence that the European Central Bank has completed its rate-cutting cycle. However, traders are reluctant to rush into new positions ahead of the ECB's key meeting on Thursday, as its final decisions could significantly affect demand for the euro and give fresh momentum to the EUR/USD pair. On Wednesday, final eurozone Consumer Price Index (CPI) data are also expected, which will play an important role in shaping market sentiment. These will be followed by the latest U.S. consumer inflation data, which will be a key driver of dollar demand and one of the main factors capable of triggering the next move in the EUR/USD pair.

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

GBP/JPY. Analysis and Forecast

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Today, the GBP/JPY pair continues its correction from the December high, approaching the round 207.00 level. The UK Office for National Statistics (ONS) released data showing that headline Consumer Price Index (CPI) inflation rose by 3.2% year-on-year in November. This figure declined sharply from 3.6% in October and fell short of analysts' expectations of 3.5%. In addition, core inflation, which excludes the most volatile food and energy components, increased by 3.2% over the same period—slightly below both the market forecast and the October reading of 3.4%. These figures support expectations that the Bank of England will cut its key interest rate as early as next Thursday, which could weigh on the British pound and put pressure on the GBP/JPY pair.

Moreover, the rise of the Japanese yen may be further driven by expectations of an inevitable interest rate hike, which the Bank of Japan could signal on Friday following its two-day monetary policy meeting. A key factor was a comment made last week by Bank of Japan Governor Kazuo Ueda, in which he emphasized that the likelihood of achieving the central bank's economic and inflation targets is gradually increasing. Ueda also noted that the Japanese regulator is approaching its inflation objectives, indicating the need to continue policy normalization. Heightened risk aversion in equity markets is also providing additional support for the yen as a safe-haven currency.

These fundamental factors point to a bearish trend for the GBP/JPY pair. However, market participants may refrain from opening aggressive positions and instead adopt a more cautious approach ahead of key events: the Bank of England's interest rate decision on Thursday and the Bank of Japan's final monetary policy announcement on Friday. These decisions will be crucial in determining the future direction of the GBP/JPY pair and the Japanese yen, especially in light of concerns about the deterioration of Japan's fiscal situation caused by Prime Minister Sanae Takaichi's large-scale spending plan, which could become a catalyst for the next wave of movement in this currency pair.

From a technical perspective, the nearest resistance for the pair is located at 207.75, ahead of the round 208.00 level. Meanwhile, the pair continues its correction, having fallen close to the 207.00 round number. If prices fail to hold above this level, the decline may accelerate toward the next round figure at 206.00, leaving the balance of power evenly split between bulls and bears.

However, as long as oscillators on the daily chart remain positive, the bulls are not ready to give up.

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

EUR/USD Forecast on December 17, 2025

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On Tuesday, the EUR/USD pair continued its upward movement after rebounding from the 38.2% corrective level at 1.1718 and by the end of the day reached the resistance zone of 1.1795–1.1802. A rebound from this zone worked in favor of the U.S. dollar and marked the start of a decline. This morning, the pair consolidated below the 1.1718 level. Thus, the decline may continue toward the next Fibonacci level of 50.0% at 1.1656. A renewed close above 1.1718 would once again favor the euro and a resumption of growth toward the 1.1802 level.

The wave situation on the hourly chart remains simple and clear. The most recently completed downward wave did not break the low of the previous wave, while the most recent upward wave broke the previous peak. Thus, the trend officially remains bullish. It would be hard to call it strong, but in recent weeks the bulls have regained confidence and begun to attack with renewed strength. Easing of the Fed's monetary policy supports further growth of the European currency, and the ECB will not create any problems for the euro in the near future.

On Tuesday, the news background was heavy for both the euro and the dollar, but I will focus only on the reports that the market actually reacted to. There were only two—Nonfarm Payrolls and the unemployment rate—and they turned out to be a tricky test. The unemployment rate rose unequivocally to 4.6%, but the situation with payrolls was less straightforward. The November report showed a higher figure than traders had expected, though not by much. At the same time, the October report "pleased" the market with a figure of –105 thousand, while September was revised up to +108 thousand. In my view, the Nonfarm Payrolls report could have been significantly worse, but the unemployment rate would have pushed the bulls into attack regardless of payrolls. The decline in the pair overnight and this morning I attribute primarily to the UK inflation report, and secondarily to a corrective pullback. There have been no corrective waves for quite some time, so one will not hurt the bullish trend.

On the 4-hour chart, the pair reversed in favor of the U.S. dollar after a bullish divergence formed on the CCI indicator. Thus, the decline process may continue for some time toward the support level of 1.1649–1.1680. A rebound from this zone would favor the euro and a resumption of growth toward the 0.0% corrective level at 1.1829.

Commitments of Traders (COT) Report

During the latest reporting week, professional players opened 8,041 long positions and closed 17,377 short positions. COT reports resumed publication after the government shutdown, but for now the data being released are already outdated—for 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 may cause numerous problems that would have long-term and structural consequences for the U.S. Despite the signing of several important trade agreements, analysts fear a recession in the U.S. economy, as well as a loss of Federal Reserve independence under pressure from Trump and in light of Jerome Powell's expected resignation in May next year.

News Calendar for the U.S. and the Eurozone

• Eurozone – German Business Climate Index (09:00 UTC).
• Eurozone – Consumer Price Index (10:00 UTC).

On December 17, the economic calendar contains only two entries, neither of which can be considered important. The impact of the news background on market sentiment on Wednesday will be very weak or nonexistent.

EUR/USD Forecast and Trading Advice

Sell positions could be opened yesterday after a rebound from the 1.1795–1.1802 level on the hourly chart, targeting 1.1718. The target has been reached. A consolidation below 1.1718 would allow traders to keep sell positions open with a target of 1.1656. Buy positions could be opened after a rebound from 1.1718 with a target of 1.1795–1.1802; this target has also been reached. New buy positions may be considered after a close above 1.1718 or after a rebound from 1.1656.

Fibonacci grids are drawn from 1.1392–1.1919 on the hourly chart and from 1.1066–1.1829 on the 4-hour chart.

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

GBP/USD Forecast on December 17, 2025

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On the hourly chart, the GBP/USD pair rose to the 1.3425 level on Tuesday, rebounded from it, reversed in favor of the U.S. dollar, and fell below the support level of 1.3352–1.3362. Thus, the decline in prices may continue today toward the next levels at 1.3294 and 1.3240.

The wave situation turned bullish several weeks ago, but over the course of today it has shifted back to bearish. The last completed upward wave broke the previous peak by only a few points, while the new downward wave managed to break the previous low. The news background for the pound has been weak in recent weeks, but the bears have fully worked it out, and the information backdrop in the U.S. also leaves much to be desired. However, this week, not-so-positive data from the UK have begun to come in again, significantly increasing the chances of further easing of the Bank of England's monetary policy.

The news background on Wednesday triggered sharp bullish attacks due to weak U.S. labor market and unemployment reports. However, the UK also released reports yesterday on unemployment, the labor market, and wages. The unemployment rate rose in the UK as well, but traders focused on U.S. statistics. This morning, however, the UK inflation report was released, forcing the bulls to flee the market in haste. The Consumer Price Index fell to 3.2% year-on-year instead of the expected 3.5%, and core inflation dropped to 3.2% year-on-year. Thus, I can confidently say that tomorrow the Bank of England will decide on another round of monetary easing. Against the backdrop of this event, the pound is losing ground, while the bears feel a surge of strength and move into a full-scale offensive. I do not know how long this offensive will last, as there will be many more important events and reports this week. Even the Bank of England meeting itself may end quite unexpectedly. In the U.S., an inflation report is due, which may also adjust traders' expectations. Today the pound is plunging; tomorrow it could be the dollar that plunges.

On the 4-hour chart, the pair completed a second rebound from the 100.0% corrective level at 1.3435, reversed in favor of the U.S. dollar, and began falling toward the 1.3140 level. A consolidation of the pair above 1.3435 would allow expectations of further growth toward the Fibonacci 127.2% level at 1.3795. No emerging divergences are observed on any indicator today.

Commitments of Traders (COT) Report

The sentiment of the "Non-commercial" category of traders did not change over the latest reporting week; however, this reporting week was a month ago—dated November 18. The number of long positions held by speculators increased by 766, while the number of short positions decreased by 981. The gap between the number of long and short positions is currently effectively as follows: 53,000 versus 132,000. As we can see, bears dominated a month ago, but the situation may now be completely different. In the euro, it was already the opposite even a month ago. Therefore, I do not believe that the market in the pound is currently bearish.

In my view, the pound still looks less "dangerous" than the dollar. In the short term, the U.S. currency occasionally enjoys demand in the market, but I believe this is a temporary phenomenon. Donald Trump's policies have led to a sharp deterioration in the labor market, and the Federal Reserve is forced to ease monetary policy in order to stop the rise in unemployment and stimulate the creation of new jobs. For 2026, the FOMC does not plan aggressive monetary easing, but at present no one can be sure of this, because labor market statistics are still unavailable.

News Calendar for the U.S. and the UK

United Kingdom – Consumer Price Index (07:00 UTC).

On December 17, the economic calendar contains only one entry, but this release may prove decisive for tomorrow's Bank of England meeting. The impact of the news background on market sentiment on Wednesday could be strong, especially in the first half of the day.

GBP/USD Forecast and Trading Advice

Sell positions could be opened after a rebound from the 1.3425 level on the hourly chart, with a target at 1.3352–1.3362. A close below this zone would allow traders to keep positions open with targets at 1.3294 and 1.3240. Today, I recommend considering buy positions only on rebounds from the nearest support levels.

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

EUR/USD. "Smart Money". The Bulls Are Disappointed, but They Are Attacking

.The EUR/USD pair resumed its upward movement after last week's FOMC meeting. By now, everyone is familiar with the meeting's outcome, the decisions taken, and the statements made. Let me remind you that in recent weeks I had been expecting a resumption of growth in the European currency, and for several consecutive weeks now the euro has been rising. Traders can still remain in long positions, and profits are increasing day by day. Moreover, at the end of last week a new bullish imbalance was formed, from which new buy trades may be opened in the future. Of course, not at the most favorable prices, since the best prices were located at imbalances 3 and 8. Nevertheless, this provides an opportunity to join the trend for those who missed the earlier signals.

The chart picture continues to signal bullish dominance. The bullish trend remains intact; a reaction from bullish imbalance 3 has been received, and a reaction from bullish imbalance 8 has also been observed. Despite the fairly prolonged decline in the European currency, the dollar failed to break the bullish trend. It had five months to do so and achieved no result. Last week, a new bullish imbalance 9 was formed, which now serves as another area of interest and a support zone for the bulls. I would also like to remind once again that if bearish patterns appear or signs of a breakdown of the bullish trend emerge, the strategy can be adjusted. At the present moment, however, nothing points to this.

The news background on Tuesday was fairly strong, but in the first half of the day it did not support bullish traders. In the morning, business activity indices were released in the European Union, and most of them turned out weaker than market expectations. Nevertheless, the bulls are not retreating and continue to attack. Ahead are the U.S. Nonfarm Payrolls and the unemployment rate, which could trigger a strong market reaction in either direction.

The bulls have had plenty of reasons for a renewed advance for two months already, and all of them remain relevant. These include the dovish (in any case) outlook for FOMC monetary policy; the general policy of Donald Trump (which has not changed recently); the confrontation between the U.S. and China (where only a temporary truce has been reached); protests against Trump (which have already swept across America three times this year); weakness in the labor market; bleak prospects for the U.S. economy (recession); and the government shutdown (which lasted a month and a half but was clearly not fully priced in by traders). Thus, further growth of the pair, in my view, will be entirely natural.

One should also not lose sight of Trump's trade war and his pressure on the FOMC. Recently, new tariffs have been introduced infrequently, and Trump himself has stopped criticizing the Federal Reserve. Personally, however, I believe this is yet another "temporary calm." In recent months, the FOMC has been easing monetary policy, which is why we have not seen a new wave of criticism from Trump. However, this does not mean that these factors no longer pose problems for the dollar.

I still do not believe in a bearish trend. The information background remains extremely difficult to interpret in favor of the dollar, which is why I do not attempt to do so. The blue line marks the price level below which the bullish trend could be considered finished. To reach it, the bears would need to push prices down about 360 points, yet they have failed to cover a much smaller distance over the past several months. The nearest upward target for the European currency remains the bearish imbalance zone of 1.1976–1.2092 on the weekly chart, which was formed back in June 2021.

News Calendar for the U.S. and the Eurozone

• Eurozone – German Business Climate Index (09:00 UTC).
• Eurozone – Consumer Price Index (10:00 UTC).

On December 17, the economic calendar contains only two entries, neither of which can be considered important. The impact of the news background on market sentiment on Wednesday will be very weak or nonexistent.

EUR/USD Forecast and Trading Advice

In my view, the pair may be in the final stage of the bullish trend. Despite the fact that the information background remains on the bulls' side, bears have attacked more frequently in recent months. Nevertheless, I currently see no realistic reasons for the start of a bearish trend.

From imbalances 1, 2, 4, and 5, traders had opportunities to buy the euro. In all cases, we saw a certain degree of growth. Opportunities to open new trend-following long positions arose when a reaction to bullish imbalance 3 was received, as well as after the reaction to imbalance 8. The upside target for the euro remains the 1.1976 level. Long positions can be kept open, with stop losses moved to breakeven. A new bullish imbalance 9 has also been formed, which may serve as a basis for opening new long trades in the future.

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