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

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

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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.

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EUR/USD Forecast on December 18, 2025

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

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

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

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

Commitments of Traders (COT) Report:

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

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

News Calendar for the US and the Eurozone:

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

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

EUR/USD Forecast and Trading Advice:

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

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

GBP/USD Forecast on December 18, 2025

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On the hourly chart, the GBP/USD pair first declined and then rose on Wednesday. At the moment, the pound has consolidated above the 1.3352–1.3362 level. A rebound from this area today would allow traders to anticipate renewed growth toward the 1.3425 level. A consolidation below the 1.3352–1.3362 level would favor the US dollar and a continuation of the decline toward the 61.8% Fibonacci level at 1.3294.

The wave structure shifted to a "bullish" one several weeks ago, but this week it has shifted back to "bearish." The most recently completed upward wave exceeded the previous peak by only a few points, while the latest downward wave managed to break the previous low. The news background for the pound has been weak in recent weeks, and the bears have fully capitalized on it, while the news flow from the US also leaves much to be desired. However, this week new data from the UK have again come in less than positive, significantly increasing the chances of further monetary policy easing by the Bank of England.

The news flow on Wednesday triggered a new attack by the bears. Strong support for the bears came from the UK inflation report, which turned out to be well below market expectations. Both inflation measures (headline and core) fell to 3.2% year-on-year, giving the Bank of England and its MPC committee solid grounds for easing monetary policy today. As a result, the bears have excellent chances to launch another attack on Thursday. However, it should be noted that the UK central bank's decision may be counterbalanced by the US inflation report. While a decline in the pound can be expected following the Bank of England meeting, a weaker-than-expected US inflation report could lead to a decline in the dollar. An inflation reading below 3% would push the FOMC toward a rate cut at its next meeting. The US labor market is recovering poorly and would clearly benefit from another round of monetary easing.

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

Commitments of Traders (COT) Report:

Sentiment among the "Non-commercial" trader category remained unchanged over the latest reporting week; however, this reporting period dates back to November 18, a month ago. The number of long positions held by speculators increased by 766, while the number of short positions decreased by 981. The gap between long and short positions currently stands at approximately 53,000 versus 132,000. As we can see, bears dominated a month ago, but the situation may now be quite different. In the euro, the situation was the opposite even a month ago. Therefore, I do not consider the market for the pound to be "bearish" at present.

In my view, the pound still appears less "dangerous" than the dollar. In the short term, the US currency periodically enjoys demand in the market, but I believe this is a temporary phenomenon. Donald Trump's policies led to a sharp deterioration in the labor market, forcing the Federal Reserve to ease monetary policy in order to curb rising unemployment and stimulate job creation. For 2026, the FOMC does not plan aggressive monetary easing, but at present no one can be certain of this, as labor market statistics remain insufficient.

News Calendar for the US and the UK:

• United Kingdom – Bank of England interest rate decision (12:00 UTC)
• United Kingdom – MPC vote results on the rate (12:00 UTC)
• United Kingdom – Bank of England accompanying statement (12:00 UTC)
• United States – Consumer Price Index (13:30 UTC)
• United States – Initial jobless claims (13:30 UTC)

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

GBP/USD Forecast and Trading Advice:

Short positions could be opened on a rebound from the 1.3425 level on the hourly chart with a target at 1.3352–1.3362. The target has been reached. New short positions may be considered after a close below the 1.3352–1.3362 level, targeting 1.3294. I recommend considering long positions today on a rebound from the 1.3352–1.3362 zone, with targets at 1.3425 and 1.3470.

Fibonacci grids are drawn from 1.3470–1.3010 on the hourly chart and from 1.3431–1.2104 on the 4-hour chart.

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

Market flees from giants

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A fresh wave of selling in technology stocks has sent the S&P 500 tumbling at the fastest pace in nearly a month. Even the dovish rhetoric from Christopher Waller, a Federal Open Market Committee (FOMC) governor, failed to provide relief. Waller stated that the federal funds rate could fall by 100 basis points. While he is among the candidates for the Fed chair position, he is not considered a favorite. The futures market has not adjusted its expectations concerning the timeline for resuming monetary expansion, with March being the most favored month for this potential shift.

Dynamics of US Stock Indices

The last shall be first. Investors are actively reallocating funds from large-cap technology stocks to small-cap companies. They are more interested in tangible profits rather than ephemeral gains. What is the point of Oracle building numerous data centers to fulfill its $300 billion commitment to OpenAI if these investments cannot yield returns?

Answering this question requires 12 to 18 months. However, traders are not prepared to wait. According to Wellington-Altus, long-term investors typically refrain from intervening in the market during this time of year. The market is dominated by emotional crowd behavior that swings to extremes, leading to sharp movements in the S&P 500 either upwards or downwards.

Nevertheless, professionals do not anticipate a dramatic reaction from the broad market index following the release of statistics on November inflation. It is projected that the S&P 500 will fluctuate no more than 0.7% either way. Historically, the average response of the index to significant data is +/-1%. This low sensitivity is attributed to signals from the Fed indicating that employment is more critical than consumer prices.

S&P 500's Reaction to US Inflation Data

Thus, in a prolonged pause in the Fed's monetary expansion cycle, the US stock market has lost its cushioning effect, and fears regarding the inability of technology giants to generate adequate returns on investments are dragging the S&P 500 southward. Investors are skeptical that mega-cap companies will exert the same influence on the broader market index as they did in the past.

Oracle's shares have fallen by 12% in December, while Broadcom has plummeted by 19%. Money is exiting the sector and flowing into others. On December 17, energy companies saw gains during trading. This increase was driven by a rally in oil prices due to the US blockade on sanctioned tankers from Venezuela and rumors of a new sanctions package against Russia should it refuse to sign a peace agreement with Ukraine.

Technically, the daily chart of the S&P 500 shows a breach of all three dynamic supports represented by moving averages. This indicates the seriousness of sellers' intentions. As long as the broad market index trades below the pivot level of 6,750, sentiment remains bearish, suggesting a focus on short positions. However, a rebound from the convergence zone of 6,690-6,700 could turn the scenario completely upside down.

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

The British Pound is Preparing for Another Period of Volatility

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Following yesterday's inflation data, the British pound is preparing for another bout of volatility. Today, the Bank of England is likely to cut interest rates, as concerns are shifting from inflation toward problems in the UK economy and labor market.

Traders and economists expect the central bank to lower its base interest rate by a quarter of a percentage point to 3.75%—the lowest level in nearly three years.

Previously, it was assumed that the decisive vote would once again come from Committee Chair Andrew Bailey, but yesterday's sharp drop in inflation increased the likelihood that one of the four hawks on the Monetary Policy Committee will switch sides. UK inflation fell to its lowest level in eight months, reaching 3.2% year-on-year after a steeper-than-expected decline in November. Private-sector wage growth has also slowed, and the economy has experienced two consecutive monthly contractions. This is expected to be enough to persuade hawkish UK policymakers to join the four advocates of looser monetary policy at the Bank of England, which include Deputy Governors Dave Ramsden and Sarah Breeden.

A more dovish move would be a clear sign that the Bank of England is concerned about slowing economic growth and the potential onset of a recession. Recent data point to weakness in the manufacturing sector and a contraction in retail sales, increasing pressure on the regulator.

The interest rate cut is intended to stimulate lending and investment, theoretically reviving economic activity. However, the effect of the cut may be limited given current geopolitical uncertainty and ongoing problems in the global economy. Moreover, some experts fear that further monetary easing could lead to undesirable consequences, such as a weaker pound sterling and higher inflation in the long term.

The impact of the Bank of England's decision on the currency market will be significant. A rate cut is expected to put pressure on the pound, making it less attractive to investors. Traders will closely monitor statements from central bank officials to understand their future plans and assess their willingness to take additional measures to stimulate the economy.

In any case, markets are pricing in a more than 90% probability of a rate cut and are forecasting another reduction by the end of April next year.

The Bank of England is also expected to publish new forecasts, which may incorporate weaker economic growth toward the end of 2025. In November, GDP growth of 0.3% was projected for the final three months of this year; however, official data released last week showed that output declined for a second consecutive month, while surveys indicated a sluggish picture in November ahead of the budget.

As for the current technical outlook for GBP/USD, pound buyers need to reclaim the nearest resistance at 1.3385. Only then will a move toward 1.3420 become possible, above which a breakout would be quite difficult. The most distant target lies in the 1.3450 level. In the event of a decline, bears will attempt to take control of 1.3350. If successful, a break of this range would deal a serious blow to bullish positions and push GBP/USD down to the 1.3320 low, with the prospect of a move toward 1.3285.

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

Today, #USDX has the potential to strengthen toward its nearest resistance level

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[#USDX]

With all technical conditions indicating a strengthening bias, then #USDX has the potential to rise today.

Key Levels

1. Resistance. 2 : 98.64

2. Resistance. 1 : 98.60

3. Pivot : 98.38

4. Support. 1 : 98.14

5. Support. 2 : 97.92

Tactical Scenario:

Positive Reaction Zone: If the price of #USDX breaks above 98.38, there is potential to test the 98.60 level.

Momentum Extension Bias: If 98.60 is broken, then #USDX may move toward 98.64.

Invalidation Level / Bias Revision:

The upside bias weakens if the price of #USDX declines and breaks below 97.92.

Technical Summary:

EMA(50) : 98.35

EMA(200): 98.39

RSI(14) : 53.58

Economic News Release Agenda:

Tonight from the United States, the following economic data will be released:

US - CPI y/y - 20:30 WIB

US - Unemployment Claims - 20:30 WIB

US - Philly Fed Manufacturing Index - 20:30 WIB

US - Natural Gas Storage - 20:30 WIB

US - TIC Long-Term Purchases - 04:00 WIB

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

There is potential weakness on the Nasdaq 100 Index today.

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[Nasdaq 100 Index]

Although a Bullish Divergence has appeared on the RSI(14), but the RSI is still in the Neutral-Bearish zone, and both EMAs are in a Death Cross configuration, suggesting that the Nasdaq 100 Index has the potential to weaken today.

Key Levels

1. Resistance. 2 : 25474.6

2. Resistance. 1 : 25083.8

3. Pivot : 24885.1

4. Support. 1 : 24464.3

5. Support. 2 : 24235.6

Tactical Scenario:

Pressure Zone: If the price breaks down below 24464.3, there is potential for a continuation to 24235.6.

Momentum Extension Bias: If 24235.6 is broken, there is an opportunity to test 23844.8.

Invalidation Level / Bias Revision:

The upside bias is restrained if the price of #NDX breaks above 25474.6.

Technical Summary:

EMA(50) : 24869.5

EMA(200): 25116.6

RSI(14) : 41.66 + Bullish Divergent

Economic News Release Agenda:

Tonight from the United States, the following economic data will be released:

US - CPI y/y - 20:30 WIB

US - Unemployment Claims - 20:30 WIB

US - Philly Fed Manufacturing Index - 20:30 WIB

US - Natural Gas Storage - 20:30 WIB

US - TIC Long-Term Purchases - 04:00 WIB

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

Gold Remains Near Historical High

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The price of gold continues to hover near record highs as investors monitor the escalating tensions in Venezuela and await U.S. inflation data. Platinum also continued its rapid rally yesterday, increasing by 4%.

The price of the precious metal rose to $4,330 per ounce, up 0.8% on Wednesday. This is approximately $50 below the historical peak reached in October. The inflation data to be released today will be closely watched as it may provide insight into the Federal Reserve's willingness to implement further interest rate cuts.

The escalation of tensions between Venezuela and the U.S. is supporting gold prices. Geopolitical uncertainty is typically seen as a factor that boosts demand for safe-haven assets such as gold. Investors are concerned about potential destabilization in the region, which could lead to a shift in capital towards more secure instruments.

Despite the current resilience of gold prices, the near-term outlook remains uncertain. Much will depend on the Fed's further actions and the overall macroeconomic situation. If U.S. inflation proves more resilient than expected, the Fed may adopt a more cautious stance on interest rate cuts, putting pressure on gold prices.

At the same time, one should not rule out the possibility that further geopolitical risks will intensify. Any escalation of conflicts or the emergence of new tension hotspots could trigger a new wave of demand for safe-haven assets, supporting gold prices at high levels.

It is worth noting that this year, the price of gold has surged by nearly two-thirds and is likely to deliver its best annual performance since 1979, following a rapid increase driven by central bank purchases and investor outflows from government debt and key currencies.

Platinum has risen by 18% and continues to grow since the trading close on December 10. The increase has occurred amid signs of tightening conditions in the London market, where banks are relocating metals to the U.S. to hedge against the risk of tariffs.

As for the current technical picture of gold, buyers need to reclaim the nearest resistance at $4,372. This will allow them to target $4,432, above which it will be quite difficult to break through. The furthest target will be around $4,481. In the event of a drop in gold prices, bears will attempt to take control of $4,304. If successful, a breakout below this range will deliver a severe blow to bullish positions and push gold down to a low of $4,249, with the potential to reach $4,186.

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

USD/JPY: Simple Trading Tips for Beginner Traders on December 18. Analysis of Yesterday's Forex Trades

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Analysis of Trades and Tips for Trading the Japanese Yen

The price test at 155.61 coincided with the MACD indicator just beginning to move upward from the zero mark, confirming an appropriate entry point to buy the dollar. However, losses were recorded on this trade because the pair did not appreciate.

The dollar managed to maintain its advantage against the Japanese yen, but a more vigorous upward trend in the USD/JPY pair has not materialized. The market appears to be pricing in a moderate tightening of monetary policy by the Bank of Japan, expecting any interest rate hikes to occur very gradually. Today's key focus will be on the U.S. inflation data, as no significant reports from Japan were published in the first half of the day.

Regarding the intraday strategy, I will focus more on executing Scenarios No. 1 and No. 2.

Buy Scenarios

Scenario No. 1: I plan to buy USD/JPY today when it reaches the entry point around 156.00 (green line on the chart), targeting a move to 156.31 (thicker green line on the chart). At 156.31, I intend to exit the long positions and open shorts in the opposite direction, anticipating a movement of 30-35 pips back from this level. It is best to resume buying the pair during corrections and significant USD/JPY drawdowns. Important! Before buying, ensure the MACD indicator is above the zero mark and just starting to rise from it.

Scenario No. 2: I also plan to buy USD/JPY today if there are two consecutive tests of 155.77 while the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to an upward market reversal. An increase towards the opposite levels of 156.00 and 156.31 can be expected.

Sell Scenarios

Scenario No. 1: I plan to sell USD/JPY today only after breaking the level of 155.77 (red line on the chart), which will lead to a rapid decline in the pair. The key target for sellers will be the 155.46 level, where I intend to exit the shorts and immediately open longs in the opposite direction, anticipating a 20-25-pip move back from this level. It is better to sell as high as possible. Important! Before selling, ensure the MACD indicator is below the zero mark and just starting to decline from it.

Scenario No. 2: I also plan to sell USD/JPY today if there are two consecutive tests of 156.00 while the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a market reversal downward. A decline towards the opposite levels of 155.77 and 155.46 can be expected.

What is on the Chart:

• Thin Green Line: Entry price at which to buy the trading instrument.
• Thick Green Line: Estimated price at which a take profit can be set, or profit realized, since further growth above this level is unlikely.
• Thin Red Line: Entry price at which to sell the trading instrument.
• Thick Red Line: Estimated price at which a take profit can be set or profit realized, since a further decline below this level is unlikely.
• MACD Indicator: When entering the market, it is important to be guided by the overbought and oversold zones.

Important: Beginner traders in the Forex market must be very cautious when making entry decisions. It is best to remain on the sidelines before significant fundamental reports are released to avoid getting caught in sharp price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without setting stop orders, you can quickly lose your entire deposit, especially if you do not use money management and trade large volumes.

And remember, for successful trading, you must have a clear trading plan, similar to the one presented above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for intraday traders.

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

GBP/USD: Simple Trading Tips for Beginner Traders on December 18. Analysis of Yesterday's Forex Trades

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Analysis of Trades and Tips for Trading the British Pound

The price test at 1.3336 occurred when the MACD indicator was beginning to move upward from the zero mark, confirming an appropriate entry point for buying the pound. As a result, the pair increased by 20 pips.

The sharp decline in UK inflation led to a decline in the British pound. However, bulls managed to reclaim their positions in the second half of the day. Several factors likely triggered the sudden reversal. Firstly, the decline in the pound reached critical levels, prompting stop-loss orders to trigger and attracting short-term buyers looking to capitalize on a rebound. Secondly, traders may have concluded that the initial reaction to the inflation data was excessive, particularly given the Bank of England's monetary policy meeting today.

The consensus among experts predicts a drop in the rate to 3.75%, which is already partially priced into the current market quotes. However, the accompanying monetary policy statement and the subsequent remarks from the BoE governor, Andrew Bailey, are of prime importance. Traders will closely analyze every statement, trying to anticipate the central bank's future strategy. The assessment of the current state of the British economy, inflation prospects, and the impact of global threats on the country's financial stability will be particularly valuable.

Regarding the intraday strategy, I will focus on executing Scenarios No. 1 and No. 2.

Buy Scenarios

Scenario No. 1: I plan to buy the pound today when it reaches the entry point around 1.3374 (green line on the chart), targeting a move to 1.3399 (thicker green line on the chart). At 1.3399, I plan to exit the market and open short positions in the opposite direction, anticipating a move of 30-35 pips back from this level. We can only expect strong pound growth following the central bank's firm stance. Important! Before buying, ensure the MACD indicator is above the zero mark and just beginning to rise from it.

Scenario No. 2: I also plan to buy the pound today if there are two consecutive tests of 1.3359 while the MACD indicator is in the oversold area. This will limit the downward potential of the pair and lead to a market reversal upwards. An increase towards the opposite levels of 1.3374 and 1.3399 can be expected.

Sell Scenarios

Scenario No. 1: I plan to sell the pound today after breaking the level of 1.3359 (red line on the chart), which will lead to a rapid decline in the pair. The key target for sellers will be the 1.3334 level, where I plan to exit short positions and immediately open longs in the opposite direction, anticipating a 20-25-pip move back from this level. Pound sellers will return if the BoE adopts a dovish stance. Important! Before selling, ensure that the MACD indicator is below the zero mark and just beginning its decline from it.

Scenario No. 2: I also plan to sell the pound today if there are two consecutive tests of 1.3374 while the MACD indicator is in the overbought area. This will limit the upward potential of the pair and lead to a market reversal downwards. A decline towards the opposite levels of 1.3359 and 1.3334 can be expected.

What is on the Chart:

• Thin Green Line: Entry price at which to buy the trading instrument.
• Thick Green Line: Estimated price at which a take profit can be set, or profit realized, since further growth above this level is unlikely.
• Thin Red Line: Entry price at which to sell the trading instrument.
• Thick Red Line: Estimated price at which a take profit can be set or profit realized, since a further decline below this level is unlikely.
• MACD Indicator: When entering the market, it is important to be guided by the overbought and oversold zones.

Important: Beginner traders in the Forex market must be very cautious when making entry decisions. It is best to remain on the sidelines before significant fundamental reports are released to avoid getting caught in sharp price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without setting stop orders, you can quickly lose your entire deposit, especially if you do not use money management and trade large volumes.

And remember, for successful trading, you must have a clear trading plan, similar to the one presented above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for intraday traders.

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

EUR/USD: Simple Trading Tips for Beginner Traders on December 18. Analysis of Yesterday's Forex Trades

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Analysis of Trades and Tips for Trading the Euro

The price test at 1.1711 occurred when the MACD indicator had moved significantly below the zero mark, limiting the pair's downside potential. For this reason, I did not sell euros. The second test at 1.1711 triggered Scenario No. 2 to buy, as the MACD was already in the oversold area, resulting in a rise of more than 20 pips in the pair.

After dovish comments from Federal Reserve officials on future interest rate dynamics, the dollar lost its morning momentum. However, the American economy, despite some weakening, remains more stable than those of many developed nations. The ongoing problem is unemployment, which has been rising lately, putting pressure on the U.S. dollar.

Today, the European Central Bank's decision on the main interest rate is expected in the first half of the day. This decision is already priced in, so it is unlikely to have a substantial impact on the markets. Intriguingly, the focus will be on Christine Lagarde's press conference. Investors are eager to hear signals about the central bank's future strategy regarding inflation and potential timelines for easing monetary policy—if such plans exist. Attention will also be given to comments regarding the outlook for the European economy. Recent data indicate an increase in growth rates, and the ECB is likely to revise its forecasts for the coming year positively.

Regarding the intraday strategy, I will focus more on executing Scenarios No. 1 and No. 2.

Buy Scenarios

Scenario No. 1: Today, I plan to buy euros when it reaches the entry point around 1.1751 (green line on the chart), targeting a move to 1.1776 (thicker green line on the chart). At 1.1776, I plan to exit the market and sell in the opposite direction, anticipating a movement of 30-35 pips back from this level. Strong euro growth can only be anticipated following a solid report. Important! Before buying, ensure the MACD indicator is above the zero mark and just beginning to rise from it.

Scenario No. 2: I also intend to buy euros today if the price tests 1.1737 twice in a row while the MACD indicator is in the oversold area. This will limit the pair's downside potential and lead to an upward market reversal. An increase towards the opposite levels of 1.1751 and 1.1776 can be expected.

Sell Scenarios

Scenario No. 1: I plan to sell euros once the price reaches 1.1737 (red line on the chart). The target will be 1.1716, where I intend to exit the market and immediately open long positions in the opposite direction, anticipating a 20-25-pip move back from this level. Selling pressure on the pair will return with weak data. Important! Before selling, ensure that the MACD indicator is below the zero mark and just beginning its decline from it.

Scenario No. 2: I also plan to sell euros today if the price tests 1.1751 twice in a row while the MACD indicator is in the overbought area. This will limit the upward potential of the pair and lead to a market reversal downward. A decline towards the opposite levels of 1.1737 and 1.1716 can be expected.

What is on the Chart:

• Thin Green Line: Entry price at which to buy the trading instrument.
• Thick Green Line: Estimated price at which a take profit can be set, or profit realized, since further growth above this level is unlikely.
• Thin Red Line: Entry price at which to sell the trading instrument.
• Thick Red Line: Estimated price at which a take profit can be set or profit realized, since a further decline below this level is unlikely.
• MACD Indicator: When entering the market, it is important to be guided by the overbought and oversold zones.

Important: Beginner traders in the Forex market must be very cautious when making entry decisions. It is best to remain on the sidelines before significant fundamental reports are released to avoid getting caught in sharp price fluctuations. If you decide to trade during news releases, always set stop orders to minimize losses. Without setting stop orders, you can quickly lose your entire deposit, especially if you do not use money management and trade large volumes.

And remember, for successful trading, you must have a clear trading plan, similar to the one presented above. Making spontaneous trading decisions based on the current market situation is inherently a losing strategy for intraday traders.

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

Stock market on December 18: S&P 500 and NASDAQ resume losses

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Yesterday, stock indices closed lower. The S&P 500 fell by 1.16%, and the Nasdaq 100 dropped by 1.41%. The Dow Jones Industrial Average declined by 0.87%.

Asian stock indices followed suit, reacting to losses in the US market as investors sold shares of technology companies amid concerns that their valuations had become excessive. Oil prices decreased after President Donald Trump, in a televised address, avoided escalating geopolitical tensions with Venezuela. This week, Washington imposed a blockade on tankers under sanctions from the South American country, with Trump accusing Caracas of depriving the United States of its "energy rights."

The regional MSCI index fell by 0.4%, with key indicators in South Korea and Japan dropping by approximately 1%. This occurred after Nvidia Corp. shares fell by 3.8%, reaching their lowest level since September.

The decline in technology stocks is yet another indication that investors are questioning the ability of companies leading the artificial intelligence boom to continue justifying their lofty valuations and ambitious investments. Concerns over the cost and feasibility of expanding data centers, such as Oracle Corp.'s funding plans in Michigan, have heightened overall apprehension regarding the sector's prospects.

Analysts are increasingly pondering the scalability of current AI models. Questions regarding the necessary computational power, the availability of skilled personnel, and, importantly, the ethical considerations surrounding AI use are becoming increasingly pressing. Some experts argue that the market is on the brink of a so-called "AI Winter," a period of declining interest in artificial intelligence characterized by disappointment over unmet expectations and insufficient profitability. Nevertheless, a complete abandonment of AI seems unlikely. Instead, a reevaluation of values and investments is expected, with a focus on more practical and profitable projects.

Against this backdrop, it is not surprising that in Japan, the largest losses were incurred by companies engaged in artificial intelligence. Shares of Lasertec Corp., Advantest Corp., and SoftBank Group Corp. fell by at least 3%. As noted earlier, Oracle's stock plummeted by over 5% in New York after the Financial Times reported that Blue Owl Capital Inc. withdrew support for a $10 billion deal to build a data center in Michigan.

Gold prices remain near record highs following a jump on Wednesday, as investors continue to search for alternatives to government bonds and currencies. The yield on shorter-term Treasury bonds has also risen.

Regarding the technical outlook for the S&P 500, the main task for buyers today will be to overcome the nearest resistance level of $6,743. Achieving this will indicate growth and open the possibility for a surge to a new level of $6,756. An equally critical task for bulls will be to establish control above the $6,769 mark, which would strengthen their positions. In the event of a downward movement amid declining risk appetite, buyers must make a stand around $6,727. A break below this level could quickly push the trading instrument back to $6,711 and pave the way down to $6,697.

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

Trading Recommendations for the Cryptocurrency Market on December 18

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The cryptocurrency market remains volatile. The sharp rise of Bitcoin towards $90,000 was quickly reversed, with the trading instrument dropping back to around $85,500, where it feels more comfortable. Ethereum is also trading below $3,000, preparing for a potential move towards $2,700.

While the bearish trend in the cryptocurrency market persists, attention was drawn to a statement made yesterday by Federal Reserve representative Christopher Waller. During his speech, he mentioned that, in his opinion, stablecoins will strengthen demand for the U.S. dollar in the near future.

Traders and market participants had mixed reactions to this statement. On the one hand, the recognition of stablecoins as a tool capable of supporting the dollar suggests some legitimacy for the cryptocurrency sector in the eyes of regulators. On the other hand, it may signal plans to increase control over the digital asset market, especially regarding those coins pegged to fiat currencies, contrary to rules already established in the GENIUS stablecoin legislation.

However, it's important to remember that the statements of individual Federal Reserve representatives do not always reflect the central bank's overall policy. The real impact of stablecoins on the U.S. dollar will depend on many factors, including trading volumes, regulatory frameworks, and competition from other currencies.

Regarding intraday strategies in the cryptocurrency market, I will continue to rely on any significant pullbacks in Bitcoin and Ethereum, anticipating the continuation of a bullish market in the medium term, which has not disappeared.

For short-term trading, the strategy and conditions are outlined below.

Bitcoin

Buy Scenario

• Scenario No. 1: Buy Bitcoin today when it reaches the entry point around $87,000, targeting a rise to $88,200. Around $88,200, I will exit the purchases and sell immediately on a rebound. Before buying on a breakout, ensure that the 50-day moving average is below the current price and the Awesome Oscillator is above zero.
• Scenario No. 2: Buying Bitcoin can occur from the lower boundary of $86,400 if there is no market reaction to its breakout back towards $87,000 and $88,200.

Sell Scenario

• Scenario No. 1: I will sell Bitcoin today when it reaches the entry point around $86,400, targeting a fall to $85,400. Around $85,400, I will exit the sales and buy immediately on a rebound. Before selling on a breakout, ensure that the 50-day moving average is above the current price and the Awesome Oscillator is below zero.
• Scenario No. 2: Selling Bitcoin can occur from the upper boundary of $87,000 if there is no market reaction to its breakout back towards $86,400 and $85,400.

Ethereum

Buy Scenario

• Scenario No. 1: Buy Ethereum today when it reaches the entry point around $2,846, targeting a rise to $2,898. Around $2,898, I will exit the purchases and sell immediately on a rebound. Before buying on a breakout, ensure that the 50-day moving average is below the current price and the Awesome Oscillator is above zero.
• Scenario No. 2: Buying Ethereum can occur from the lower boundary of $2,812 if there is no market reaction to its breakout back towards $2,846 and $2,898.

Sell Scenario

• Scenario No. 1: I will sell Ethereum today when it reaches the entry point around $2,812, targeting a fall to $2,757. Around $2,757, I will exit the sales and buy immediately on a rebound. Before selling on a breakout, ensure that the 50-day moving average is above the current price and the Awesome Oscillator is below zero.
• Scenario No. 2: Selling Ethereum can occur from the upper boundary of $2,812 if there is no market reaction to its breakout back towards $2,846 and $2,898.

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

Intraday Trading Strategies for Beginners on December 18

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The euro and British pound quickly recovered from losses incurred in the first half of the day; however, a bullish market has yet to develop, and there are objective reasons for this.

The dollar lost ground following dovish statements from Federal Reserve officials on future interest rates. Traders reacted to hints of further monetary policy easing. However, such a reaction could be premature. Today, several important decisions are expected that could overturn the current market picture.

A European Central Bank decision regarding the main interest rate is anticipated, as is a similar decision from the Bank of England.

Attention will be closely focused on Christine Lagarde's press conference as ECB President. Traders and analysts will be looking for hints about future easing measures amid slowing eurozone inflation. Any signals indicating a readiness for further stimulus could apply pressure on the euro. However, Lagarde is likely to maintain a cautious tone, emphasizing the need to assess incoming data while keeping options open for future action. She will likely avoid making concrete commitments to avoid constraining the ECB's future flexibility. New economic forecasts from the ECB will also be scrutinized.

Regarding the pound, the BoE's decision on the key interest rate may weigh on the currency. Most analysts are confident that the rate will be lowered to 3.75%. However, the most significant interest lies in the accompanying statement regarding monetary policy, as well as the subsequent comments from the BoE's Governor, Andrew Bailey. Markets will closely analyze every word to catch hints about the central bank's future actions. Traders are particularly interested in how quickly the BoE intends to continue easing monetary policy moving forward. It should be noted that this year, the regulator has followed a plan of quarterly rate cuts. If the BoE refrains from providing clear indications regarding future policy, volatility in financial markets could substantially increase.

If the data aligns with economists' expectations, it is advisable to rely on the Mean Reversion strategy. Conversely, if the data is significantly above or below economists' expectations, the Momentum strategy will be most appropriate.

Momentum Strategy (Breakout):

For the EUR/USD pair:

• Buy on a breakout above 1.1754, which could lead to the euro rising to around 1.1776 and 1.1817.
• Sell on a breakout below 1.1729, which could result in a decline to around 1.1706 and 1.1684.

For the GBP/USD pair:

• Buy on a breakout above 1.3380, which could lead to a rise in the pound to around 1.3421 and 1.3452.
• Sell on a breakout below 1.3360, which could result in a decline to around 1.3340 and 1.3322.

For the USD/JPY pair:

• Buy on a breakout above 156.00, which could lead to the dollar rising to around 156.45 and 156.89.
• Sell on a breakout below 155.67, which could lead to a decline in the dollar to around 155.32 and 155.01.

Mean Reversion Strategy (Pullback):

For the EUR/USD pair:

• Look for selling opportunities after a failed breakout above 1.1753 on a return below this level.
• Look for buying opportunities after a failed breakout below 1.1733 on a return to this level.

For the GBP/USD pair:

• Look for selling opportunities after a failed breakout above 1.3383 on a return below this level.
• Look for buying opportunities after a failed breakout below 1.3356 on a return to this level.

For the AUD/USD pair:

• Look for selling opportunities after a failed breakout above 0.6614 on a return below this level.
• Look for buying opportunities after a failed breakout below 0.6596 on a return to this level.

For the USD/CAD pair:

• Look for selling opportunities after a failed breakout above 1.3790 on a return below this level.
• Look for buying opportunities after a failed breakout below 1.3771 on a return to this level.

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

What to Pay Attention to on December 18? Analysis of Fundamental Events for Beginners

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Macroeconomic Report Analysis:

There aren't many macroeconomic reports scheduled for Thursday, but one on U.S. inflation is highly significant. Recall that the employment data from the U.S. labor market this week has once again proven to be weak and contradictory, suggesting that the Federal Reserve may continue to lean towards making dovish decisions. This is only hindered by the rising inflation seen in recent months. If the Consumer Price Index for November shows a new acceleration, it will be a positive sign for the dollar, as the Fed may then take a prolonged pause on easing monetary policy. However, if inflation slows, the Fed could lower the key rate as early as January, leading the market to aggressively sell the dollar once again.

Analysis of Fundamental Events:

At least two fundamental events are scheduled for Thursday. The European Central Bank meeting garners some interest, although the market does not expect any changes in monetary policy. The only notable point is that Christine Lagarde may hint at a potential rate hike in 2026, which could spur growth for the euro. In contrast, the BoE's meeting is much more significant, as a decision to lower the key rate may be made today, given that inflation has fallen to 3.2%. Additionally, the results of the Monetary Policy Committee's vote on the rate and the BoE's expectations for 2026 will be significant. Thus, there are three major events today that have a "significant" status and could trigger substantial movements in the currency market.

General Conclusions:

On the penultimate trading day of the week, both currency pairs will be influenced by macroeconomic data and fundamental factors. Both pairs can be traded from the nearest technical levels and areas. For the euro, this area is 1.1745-1.1754, and for the pound, it is 1.3319-1.3331. However, it is essential to remember that throughout the day, both pairs may exhibit sharp reversals, and volatility is likely to be high.

Key Rules of the Trading System:

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

Chart Explanations:

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

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

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

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

How to Trade the GBP/USD Currency Pair on December 18? Simple Tips and Trade Analysis for Beginners

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Analysis of Wednesday's Trades:

1H Chart of the GBP/USD Pair

The GBP/USD pair experienced a sharp decline on Wednesday, recovered, and then resumed a new downward move. The ascending trendline has been broken, so a correction may occur in the near future. Yesterday, the UK inflation report was published, providing a definitive conclusion on the Bank of England's monetary policy decision scheduled for today. There is now no doubt that the British central bank will cut the key interest rate, which is a bearish factor for the British currency. While this decision may already be partially priced in, a decline could still be observed today, as the BoE may adopt a more dovish stance in 2026 than the market expects. Additionally, U.S. inflation remains one of the most significant indicators. Reports on the U.S. labor market for November were quite contradictory, but we would label them as largely negative. Therefore, a decline in U.S. inflation could lead to a drop in the dollar as the market anticipates further Federal Reserve easing. Traders can expect another busy day today, and volatility is likely to remain high.

5M Chart of the GBP/USD Pair

On the 5-minute timeframe, two solid sell signals were formed throughout Wednesday. As soon as the pair started moving less sluggishly, strong signals began to appear. Early in the Asian trading session, the price bounced from the 1.3413-1.3421 area, and by the time of the European open, it had barely moved away from the pivot point. Thus, novice traders could open short positions. Within just an hour, the 1.3319-1.3331 range was tested, and the pair failed to break through. A buy signal was generated, yielding profits.

How to Trade on Thursday:

On the hourly timeframe, the GBP/USD pair may enter a downward correction since the trendline has been broken. As mentioned, there are no global foundations for medium-term dollar growth, so we expect movement only to the upside. Overall, we anticipate a resumption of the global upward trend for 2025, which could lead the pair to the 1.4000 level within the next couple of months.

On Thursday, novice traders may consider new long positions if the price bounces from the 1.3319-1.3331 area, targeting the 1.3413-1.3421 range. If this area is breached, short positions will become relevant, with targets at 1.3259-1.3267.

On the 5-minute timeframe, levels to consider include 1.2913, 1.2980-1.2993, 1.3043, 1.3096-1.3107, 1.3203-1.3212, 1.3259-1.3267, 1.3319-1.3331, 1.3413-1.3421, 1.3466-1.3475, 1.3529-1.3543, 1.3574-1.3590. Wednesday sees the announcement of the BoE meeting results in the UK, and in the U.S., the inflation report will be published. Both events are crucial and could provoke a strong market reaction.

Key Rules of the Trading System:

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

Chart Explanation:

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

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

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

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

How to Trade the EUR/USD Currency Pair on December 18? Simple Tips and Trade Analysis for Beginners

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Analysis of Wednesday's Trades:

1H Chart of the EUR/USD Pair

The EUR/USD currency pair corrected downward on Wednesday, but the upward trend remains intact, as clearly shown in the illustration above. Yesterday, the euro declined sharply, despite an essentially absent macroeconomic and fundamental backdrop. Traders might have felt that a downward trend was beginning, which is indeed possible, as the price reached the upper boundary of the sideways channel of 1.1400-1.1830 on the daily timeframe. However, the flat has lasted for six months, and sooner or later, it must come to an end. Thus, we believe it's still too early to panic and expect a new decline in the pair. Growth may continue. Today, an important inflation report from the U.S. is set to be published, which could trigger volatility and weaken the dollar. If inflation begins to slow, it will increase the likelihood of another Federal Reserve rate cut in January. The European Central Bank meeting will also take place, but significant decisions are not expected at this time, although surprises are always possible. The price continues to remain above the trend line, so there are few grounds to expect a decline.

5M Chart of the EUR/USD Pair

On the 5-minute timeframe, a good sell signal formed on Wednesday night. The price bounced from the 1.1745-1.1754 range, allowing novice traders to open short positions. However, the pair did not reach the target level of 1.1666 and returned to its starting positions by the end of the day. We consider the recovery of the pair in the second half of the day, without any visible reasons, to be a positive sign for the prospects of further growth.

How to Trade on Thursday:

On the hourly timeframe, the EUR/USD pair continues to exhibit an upward trend. The overall fundamental and macroeconomic backdrop remains very weak for the U.S. dollar, so we expect the pair to continue to grow. The price has reached the upper line of the sideways channel of 1.1400-1.1830, so it now needs to either break through it or remain in the flat.

On Thursday, novice traders can again trade from the 1.1745-1.1754 area. A bounce from this area will allow for short positions with targets at 1.1655-1.1666. If the price consolidates above this area, then long positions targeting 1.1808 will become relevant.

On the 5-minute timeframe, consider the levels 1.1354-1.1363, 1.1413, 1.1455-1.1474, 1.1527-1.1531, 1.1550, 1.1584-1.1591, 1.1655-1.1666, 1.1745-1.1754, 1.1808, 1.1851, 1.1908, 1.1970-1.1988. On Thursday, the ECB meeting will take place in the EU, which may have significant repercussions. The Bank of England meeting in the UK could also impact the European currency. In the United States, an important inflation report for November will be published, which is crucial for the Fed's monetary policy. At least three events could provoke substantial movements in the market.

Key Rules of the Trading System:

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

Chart Explanations:

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

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

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

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

GBP/USD Overview. December 18. The Pound Hit by Inflation

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The GBP/USD currency pair has been more active over the past two days than the EUR/USD pair. However, it has not shown any super-interesting movements. Essentially, we witnessed a new surge upward on somewhat weak U.S. labor-market data, followed by a correction on a weaker-than-expected inflation report from the UK—and that was it. It is worth noting that inflation figures are not currently significant for the European Central Bank, which has managed to stabilize its rate around 2%. However, they are very important for the Bank of England and the Federal Reserve. The U.S. inflation report will be released today, while the UK report was released yesterday. We will focus on these two indicators, especially given today's BoE meeting.

The UK inflation report showed a slowdown to 3.2%. While there is ambiguity surrounding the U.S. Non-Farm Payrolls, the situation with UK inflation is clear. Inflation is falling for the second consecutive month at a significantly high pace. Of course, this does not mean it will continue to decline for another five months, but it does mean we will likely see the BoE ease monetary policy further today. Will the British pound react to this event? We believe that if it does, the decline will not be strong, as the market is already prepared for this decision. The composition of the Monetary Policy Committee votes will be of much greater importance. Specifically, the distribution of votes in favor of reducing the rate versus maintaining it. In any case, it is important to note that in September and November, the U.S. dollar performed well despite two Fed rate cuts. Why should the pound necessarily drop today if the decision is already essentially known to traders?

We believe that the overall trend and global factors, which remain unchanged, hold greater significance. The Fed has cut the key rate three times, two of which the market has not yet priced in. The pound has been falling for several months without compelling reasons. Thus, we believe that the global upward trend is not cancelled, and its fundamental basis has not changed. Therefore, we still expect further growth of the British currency—not because it is super attractive or because the British economy has no problems, but because the situation in America remains extremely negative.

Separately, we highlight the U.S. inflation report. If it is revealed today that inflation has slowed or is weaker than the forecast (3%), the U.S. dollar may resume its decline, as the Fed will have even more reasons to cut rates for the fourth consecutive time at the January 28 meeting. The labor market, even if it has stopped declining, is not growing as required. Meanwhile, inflation is decreasing (hypothetically). It appears Donald Trump was correct in calling for a key rate cut. Overall, tomorrow's developments could be unexpected for many traders. This week has been quite "crazy," so the main goal is to avoid significant losses.

The average volatility of the GBP/USD pair over the last five trading days, as of December 18, is 77 pips. For the pound/dollar pair, this value is considered "average." On Thursday, December 18, we expect the pair to trade within a range bounded by 1.3308 and 1.3464. The upper linear regression channel is pointing downward, but this is merely a technical correction on higher timeframes. The CCI indicator entered oversold territory 6 times in recent months and formed several "bullish" divergences, consistently signaling a potential resumption of the upward trend. Last week, the indicator formed another bullish divergence, but the week ended with two entries into overbought territory and two "bearish" divergences. Conclusion: a correction within the upward trend.

Nearby Support Levels:

• S1 – 1.3367
• S2 – 1.3306
• S3 – 1.3245

Nearby Resistance Levels:

• R1 – 1.3428
• R2 – 1.3489
• R3 – 1.3550

Trading Recommendations:

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

Explanations for Illustrations:

• Support and resistance price levels are marked by thick red lines, where movement may conclude. They are not sources of trading signals.
• The Kijun-sen and Senkou Span B lines are Ichimoku indicator lines transferred to the hourly timeframe from the 4-hour timeframe. They are significant 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 each category of traders' net position.

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

EUR/USD Overview. December 18. Calmness, Just Calmness

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The EUR/USD currency pair was more active on Tuesday and Wednesday, yet overall it didn't warrant a standing ovation. Consider this: on a highly informative Tuesday, the total volatility was only 75 pips. And that was on a day when a good dozen important macroeconomic reports were released in both the Eurozone and the U.S. Thus, we can draw a few conclusions that should be obvious to all. The first conclusion is that the flat trend on the daily timeframe remains relevant, which explains the relatively low volatility even on days when volatility would logically be the highest. The second conclusion is that the market was not impressed by the U.S. macroeconomic data it had anticipated for over two months. Honestly, the market ignored all data except for the NonFarm Payrolls and the unemployment rate. Therefore, we will focus on those reports.

There are no questions regarding the unemployment rate, but there are many regarding Nonfarm Payrolls. However, it's important to remember that seeing the figures alone isn't enough; one must understand how to relate them to one another. For example, how can we evaluate the NonFarm Payrolls report? The September report was revised upward, the October report was disappointing, and the November report exceeded forecasts by only 10,000. In the end, did NonFarm Payrolls please dollar enthusiasts or not? Perhaps the market can help us figure it out? No. Initially, the dollar fell sharply, then rose just as sharply, despite the absence of any significant events in either the EU or the U.S. on Wednesday, and it began rising even during the night with no significant news.

Further complicating matters, how does one reconcile the seemingly contradictory NonFarm figures with the unemployment rate? The unemployment report clearly disappointed, as its value significantly exceeded analysts' forecasts. But how do we interpret NonFarm Payrolls? Did NonFarm Payrolls overshadow negative unemployment? Or the opposite? And what is happening with the U.S. labor market? Is it beginning to recover? Have the three rounds of Federal Reserve monetary policy easing borne fruit? We believe that answers to these questions were not provided this week.

Thus, we do not see any reasons to conclude the local upward trend, but at the same time, we note that the EUR/USD pair has reached the upper boundary of the sideways channel of 1.1400-1.1830. Therefore, a technical reversal down is possible, with a return to the 1.1400 level. Unfortunately, this is the reality. If the price does not manage to consolidate above 1.1830 soon (not just liquidate but establish a firm holding), the flat will remain. This means we will continue to observe low volatility and illogical movements. Overall, the situation is not very favorable. However, the long-term outlook remains unchanged. The dollar still has no strong cards to play, and the Fed may decide to ease monetary policy again in January.

The average volatility of the EUR/USD pair over the last five trading days, as of December 18, is 56 pips and is characterized as "average." We expect the pair to trade between 1.1692 and 1.1804 on Thursday. The upper linear regression channel is directed downwards, signaling a downward trend, but, in fact, the flat continues on the daily timeframe. The CCI indicator entered oversold territory twice in October (!!!) but visited the overbought region last week. A downward retracement is possible.

Nearby Support Levels:

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

Nearby Resistance Levels:

• R1 – 1.1780
• R2 – 1.1841

Trading Recommendations:

On Thursday, traders may trade from the 1.1750-1.1760 area. A rebound from this area will make short positions relevant, targeting the Senkou Span B line. If the quote 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 significant 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 each category of traders' net position.

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

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.