EUR / USD. Results of 2018: the dollar has accumulated a load of problems, the fate of the euro depends on Brexit

On Friday, disappointing data on inflation in Germany came out. On a monthly basis, the German consumer price index remained at 0.1% (although experts predicted its growth to 0.3%), and in annual terms fell to 1.7 % is the worst result since April. Germany is the "locomotive" of the European economy; therefore, such a weak dynamic speaks of a similar trend throughout the eurozone. Actually, the latest data of the European CPI already indicate a slowdown in inflation and, apparently, the decline in key inflation indicators will continue in early 2019.

AejN6NqD7soW1o3r6N2bX_6On_2x5weQR_zXhp7HIt is worth noting that the euro/dollar pair actually ignored Friday data, although, as a rule, the single currency reacts rather sharply to the dynamics of the German indicators. This suggests that now traders are focused only on US events, and the motion vector of EUR / USD depends on the behavior of the greenback. In turn, events in the United States are characterized by the confrontation of the White House and Congress, the dynamics speak of a serious political split.

The congressmen had the opportunity to make concessions to Trump last Thursday, but they chose to leave this problem to their successors, who were elected in November of this year. In other words, now the question of allocating $ 5 billion to build a wall between Mexico and the United States will be considered in January when the Democrats will gain control of the House of Representatives, but the Republicans will take several additional seats in the Senate. The political split will only get worse, with each side using the available leverage.

So, recently, Trump said that if Congress did not allocate the above amount, he would be forced to "close the southern border." He also threatened to stop financial assistance to Guatemala, Honduras and El Salvador (as they allegedly take a passive stance on the issue of illegal migration). Representatives of the Democratic Party refuse to make any compromise, accusing Trump of politicizing the issue.

As a result, the negotiations are at an impasse, and the shutdown continues. Hundreds of thousands of federal employees are either sent on unpaid leave, or they continue to leave work without receiving a salary. However, traders are not worried about the fact of the shutdown (this year alone, this mode was introduced for the third time). This situation suggests that it will be difficult for American politicians to find a common denominator on key issues, including those of an economic nature.bFWE6hvni5q-EXeXeEQqyhIPYfUYp0s4ZPrybkM5Let me remind you that after the announcement of the first results of the midterm elections, the dollar essentially lost ground. But later Donald Trump announced that he agreed to work with Democrats on key economic projects, including in the area of infrastructure development. This fact inspired dollar bulls, after which the greenback recovered throughout the market. As we see, the real picture of political relations differs significantly from the intentions voiced in the fall, and this fact will exert background pressure on the dollar. It is worth noting that the momentum of economic growth in the United States is gradually fading (recent data on GDP growth eloquently speaks about it). Firstly, because of the protectionism of the White House (Trump), and secondly, because of the completion of the tax effect reform. Such dynamics forced the Fed to reconsider its forecasts for the next year and slow down the pace of rate hikes next year.

Thus, next year, the dollar will be under pressure from several interrelated factors. The European currency, in turn, depends only on the prospects of Brexit and the dynamics of inflation growth in the eurozone. In particular, ECB Board Member Sabine Lautenschlager said today that the issue of raising rates next year depends on inflation data for the first and second quarters of 2019. If the price pressure increases, the regulator will tighten monetary policy. Naturally, the tough Brexit will erase the hawkish attitude of the ECB. So the British have the key to the northern dynamics EUR / USD. Obviously, with the chaotic Brexit, even a weak dollar will not be able to provide a pair of growth, given the "apocalyptic consequences" of such a scenario.

Summing up this year in the context of the EUR / USD pair, we can conclude that the year was in favor of the American currency. If in January the pair was at 1.25, now the bulls are only trying to approach the 15th figure border. However, the next year will not be easy for the greenback. Too many worries have been coming lately. The negative impact of trade conflicts, the slowdown in the US economy, the slowdown in the Fed's monetary tightening, the uncertain situation in the stock markets, political conflicts within the US, and in the end, Trump's criticism of the Fed. Will the dollar withstand such a powerful onslaught?

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Disputes about this do not subside among the experts. In my opinion, the EUR / USD pair has the potential for growth to at least the 17th figure (1.1715 - the top line of the Bollinger Bands on the weekly chart), but with one caveat. If Brussels and London can avoid the hard Brexit. Therefore, it will be possible to talk about the future prospects of the couple already in January, when British politicians will announce their verdict on a historic deal.

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Wave analysis of GBP / USD for December 31. Pound returns to weekly highs

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Wave counting analysis:

On December 28, the GBP / USD currency pair gained about 60 basis points during the day and returned to the highs of the estimated wave c, 2, b. Wave c, 2, b, is still considered complete. If this is true, then the decline in quotations will resume with the first targets located near the level of 0.0%. A successful attempt at a level of 38.2% on the lower Fibonacci grid will indicate that the pair is ready to further increase and complicate wave 2, b.

The objectives for the option with purchases:

1.2742 - 38.2% of Fibonacci

1.2825 - 50.0% of Fibonacci

The objectives for the option with sales:

1.2475 - 0.0% of Fibonacci

1.2229 - 323.6% of Fibonacci (senior grid)

General conclusions and trading recommendations:

The GBP / USD currency pair has presumably completed the construction of a 3-wave structure. An unsuccessful attempt to break the mark of 1.2742 indicates a pair's willingness to decline, and I recommend selling the pair in small volumes with targets located about 25 figures and below. A break of 38.2% Fibonacci level will trigger a version with a complexity of wave 2, b. There is still no news, which affects the activity of the tool. After the holidays, I expect an increase in market activity.

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GBP / USD. 31st of December. The trading system. "Regression Channels". British pound remains in a narrow price range

4-hour timeframe

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Technical details:

The senior linear regression channel: direction - down.

The junior linear regression channel: direction - down.

Moving average (20; smoothed) - sideways.

CCI: 57.3373

Once again, the GBP / USD currency pair failed to consolidate for a long time below the MA and develop a downward movement. However, it is also failing to continue the upward movement due to the frank flat formed on the instrument in recent days. So far, the pair have also failed to overcome the resistance zone of 1.2695 - 1.2726, from which it bounced off 4 times already. In general, the British currency behaves on holidays absolutely logical, flat with a decrease in volatility and activity. Thus, market participants need only to wait until the holidays are over. After the New Year for the British pound, X will again come again, since in the first half of January the work of the Brexit parliament will resume, and a vote for / against Theresa May's bill according to the Checkers plan will take place. Macroeconomic reports will also slowly begin to be published in the States and the UK, which will also influence the movement of the pair. On the last trading day of the outgoing year, we can only recommend not to risk in vain, as not only is the activity on the pair very low now, the market is also very "sensitive", which can result in unexpected and unpredictable movements. Resume trade better in 2019.

Nearest support levels:

S1 - 1.2665

S2 - 1.2634

S3 - 1.2604

Nearest resistance levels:

R1 - 1.2695

R2 - 1.2726

R3 - 1.2756

Trading recommendations:

The currency pair GBP / USD has fixed back above the MA, therefore, at the moment, long minimal lots with targets at 1.2726 and 1.2756 are relevant. Opening any positions is now associated with increased risks, so before the end of the holidays, you cannot enter the market.

Sell positions can be considered no earlier than reversing the price below the moving average. In this case, the short positions will become relevant as small lots with targets of 1.2604 and 1.2573. In general, the pair remains frank flat.

In addition to the technical picture, you should also consider the fundamental data and the time of their release.

Explanations for illustrations:

The senior linear regression channel is the blue lines of the unidirectional movement.

The junior linear channel is the purple lines of the unidirectional movement.

CCI is the blue line in the indicator regression window.

The moving average (20; smoothed) is the blue line on the price chart.

Murray levels - multi-colored horizontal stripes.

Heikin Ashi is an indicator that colors bars in blue or purple.

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Wave analysis of EUR / USD for December 31. Two unsuccessful attempts to break the level of 1.1471

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Wave counting analysis:

The trading on Friday, December 28, ended for the pair EUR / USD by 10 basis points growth and another test level of 100.0%. The unsuccessful attempt to break through this level led to the departure of quotes from the reached maximums and indicates the readiness of the instrument to decline as part of the proposed new downward trend. If wave c is truly complete. Immediately two unsuccessful attempts to break through the level of 100.0% speak precisely in favor of this scenario. Thus, I expect quotes to drop to at least 13 figures in the region.

The objectives for the option with sales:

1.1215 - 0.0% of Fibonacci

The objectives for the option with purchases:

1.1471 - 100.0% of Fibonacci

1.1528 - 127.2% of Fibonacci

General conclusions and trading recommendations:

The pair allegedly completed the construction of a wave c. Thus, now I recommend cautious sales of the pair with targets located around 13 figures and an estimated mark of 1.1215, which equates to 0.0% Fibonacci. Wave c may complicate its internal structure, but without a successful attempt to break through the 100.0% of Fibonacci level, this option will not be executed.

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EUR / USD. 31st of December. The trading system. "Regression Channels". Hopes for euro growth do not come true

4-hour timeframe

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Technical details:

The senior linear regression channel: direction - down.

The younger linear regression channel: direction - up.

Moving average (20; smoothed) - up.

CCI: 49.5263

The currency pair EUR / USD on Monday, December 31, began a downward movement, once again failing to overcome the resistance zone of 1.1440 - 1.1470. So far, for European currency, these exchange rate values are the limit. Indeed, there are no compelling reasons for a stronger strengthening of the euro. Especially considering the status of the holiday, the last 5-6 days. No important macroeconomic information was published these days. There have been no reports from the leaders of the EU and the ECB. Thus, traders in these could only sum up the results of the year and record profits on positions on the eve of holidays. Perhaps it was thanks to the fixation of profits on the "dollar" positions, of which in 2018 much more than the opposite was open, the euro went up at the end of the year. In general, the balance of power between the States and the EU has not yet changed dramatically. Yes, in 2019, the course on tightening the monetary policy of the Fed can be completed. At the same time, the ECB has finally completed the course of quantitative stimulation of the economy and may even start thinking about the first increase in the key rate in a long time. However, so far neither the first condition nor the second one has been fulfilled, and the situation with Brexit has not been resolved, the euro may continue to remain under market pressure. In the current situation, Donald Trump may come to the aid of the euro currency with yet another scandal or discouragement.

Nearest support levels:

S1 - 1.1414

S2 - 1.1383

S3 - 1.1353

Nearest resistance levels:

R1 - 1.1444

R2 - 1.1475

R3 - 1.1505

Trading recommendations:

The EUR / USD currency pair has started a downward movement, settling above the moving average. Thus, the longs now remain relevant small lots with a target of 1.1475, but after the completion of the correction, which will be signaled by the Heikin Ashi indicator.

Sell orders are recommended to open with the goal of 1.1383 if the bears manage to overcome the moving average line. In this case, for some time, the tendency for the instrument to change to downward.

In addition to the technical picture, you should also consider the fundamental data and the time of their release.

Explanations for illustrations:

The senior linear regression channel is the blue lines of the unidirectional movement.

The younger linear regression channel is the purple lines of the unidirectional movement.

CCI - blue line in the indicator window.

The moving average (20; smoothed) is the blue line on the price chart.

Murray levels - multi-colored horizontal stripes.

Heikin Ashi is an indicator that colors bars in blue or purple.

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

Analysis of the EUR / USD divergence for December 31. New fall to 1.14?

4h

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The EUR / USD currency pair reversed in favor of the US currency near the previous peak and consolidated below the correction level of 38.2% - 1.1446. As a result, on December 31, the fall in quotations can be continued in the direction of the correctional level of 23.6% - 1.1358. There is no indicator of the emerging divergences today. Fixing the pair above the Fibo level will work in favor of the EU currency and the resumption of growth in the direction of the correction level of 50.0% - 1.1515.

The Fibo grid is built on extremes from September 24, 2018, and November 12, 2018.

Daily

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On the 24-hour chart, the pair resumed the growth process in the direction of the corrective level of 100.0% - 1.1553. None of the indicators have maturing divergences on the current chart. The turn in favor of the US dollar on the 4-hour chart makes it possible to expect a return of quotations to the Fibot level of 127.2% - 1.1285 and at the 24-hour one. Reversal of quotes from the correction level of 100.0% will similarly work in favor of the beginning of the fall of the pair.

The Fibo grid is built on extremums from November 7, 2017, and February 16, 2018.

Recommendations to traders:

You can make purchases of the EUR / USD currency pair with a target of 1.1515 and a Stop Loss order below the Fibo level of 38.2% if the pair closes above 1.1446.

Sales of the EUR / USD currency pair can be carried out now with the goal of 1.1358 with a Stop Loss order above the Fibo level of 38.2%, since the pair completed closing below the correction level of 1.1446.

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Forecast of GBP / USD December 31, 2018

GBP / USD

The British pound meets the new year under the line of the daily price scale channel and under the balance line of the same TF. And if the pound had two unsuccessful attempts to overcome this line before the new year, now there is no need to repeat it again.

On the four-hour chart, the oscillator line develops under the graphics support line, turning down each time it touches. But for more confident movement and a formalized signal for a further decrease, the price needs to be fixed under the Kruzenshtern line on the four-hour chart, below 1.2645. In this case, the signal line of the Marlin oscillator on the daily scale will be in the zone of decline, and the situation on both graphs will be completely decreasing. The goal of 1.2488 will be relevant.

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Indicator analysis. Daily review of the currency pair GBP / USD for December 31, 2018

Trend analysis (Fig. 1).

On Monday, upward work is possible with the first top target of 1.2754, a rolling level of 14.6% (yellow dotted line).

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Fig. 1 (daily schedule).

Comprehensive analysis:

- Indicator analysis - up;

- Fibonacci levels - up;

- Volumes - up;

- Candlestick analysis is neutral;

- Trend analysis - up;

- Bollinger lines - up;

- Weekly schedule - up.

General conclusion:

On Monday, upward work is possible with the first top target of 1.2754, a rolling level of 14.6% (yellow dotted line).

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Analysis of GBP / USD Divergences for December 31. The pound is held in the lateral range

4h

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The GBP / USD currency pair on the 4-hour chart continues to trade within the sideways range indicated in the illustration by the blue rectangle. Reaching the upper region of this range, the quotes made a U-turn in favor of the US currency and began to fall in the direction of the lower region of this range. The correction level of 100.0% now has almost no value in terms of rebound / breakdown. Going beyond the blue area will allow traders to rely on the resumption of the trend movement.

The Fibo grid is built on extremes from August 15, 2018, and September 20, 2018.

1h

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On the hourly chart, the quotes of the pair once again made a return to the correction level of 100.0% - 1.2696 and rebound from it with a reversal in favor of the American dollar. Thus, on December 31, the process of falling quotations can be continued in the direction of the correctional level of 127.2% - 1.2566. The maturing divergences today are not observed, and the closure of the pair above the Fibo level of 100.0% will make it possible to expect a resumption of growth in the direction of the correction level of 76.4% - 1.2809.

The Fib net is built on extremes from October 30, 2018, and November 7, 2018.

Recommendations to traders:

New purchases of the GBP / USD currency pair can be made with the target of 1.2809 and a Stop Loss order below the 100.0% level if the pair closes above the Fibo level of 1.2696 (hourly chart).

Sales of the GBP / USD currency pair can be carried out now with the target of 1.2620 (previous local lows) and a Stop Loss order above the 100.0% level, since the pair has completed the rebound from the level of 1.2696 (hourly chart).

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Forecast for EUR / USD for December 31, 2018

EUR / USD

On Friday, trading volumes on the euro were above average with a range of only 46 points, which shows us about the ongoing repositioning of investors. The price remained below the Kruzenshtern line on the daily scale, which lowers the probability of a breakthrough upwards. But this option is preserved on the first trading day of the new year, January 2. Opening with a rising gap, a price increase in the range of 1.1526 / 75 will be a good sign of a price reversal for a medium-term decrease. The opening of the new year with a decreasing gap will extend the range of trade near the price channel line, as it has been since mid-November. But in the future, we are also waiting for the mid-term decline in the euro.X_kenheq-GSjhXmPujmgm86v5p0ySJ8jBtTVqk5-aAIglYUsqJ6-1nEpTNN_dC7YPtxyUJK7ZtQsDUC0The four-hour chart shows the general mood of the price up, the trend for all indicators is rising. But the signal line of the Marlin oscillator came close to the border of lowering the trend, and the price attempt to test the Kruzenshtern line (1.1403), which is very possible, since the balance line may remain lower than the price while not rapidly decreasing, it will allow the price to close this year under the price line daily timeframe channel.

Thus, the probability of opening the market in January with both increasing and decreasing is equal.The material has been provided by InstaForex Company - www.instaforex.com

Forecast of AUD / USD for December 31, 201

AUD / USD

On the daily chart of the currency pair, the Marlin oscillator signal line is discharged from the oversold zone; on the four-hour chart, the same oscillator is actively growing in the zone of positive numbers. From this angle of view, the exit of the price for the Kruzenshtern line of the four-hour halftime is possible, more precisely, the exit of the price in the range of 0.7079-0.7110. The upper limit of the range is the resistance of the embedded line of the price channel of the daily timeframe.o9Z19s_rEvR1vL9VaQf2ZzHaj8z4p7YaGTfMvUkH7kzucDCsR1w_BSYG-XCwG0X6EjfnfL_ujrclA-aeBut regardless of whether the Australian undertakes such a breakthrough or not, the downward target of 0.6980 persists in the near future.

Three months ago, we posted a long-term forecast for AUD / USD based on the monthly chart. The long-term goal was defined area of 0.5660. Now this chart looks like this:

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Practically little has changed during this time. The price is still close to the rising trend line. But a new element confirming this scenario was added. The current December black candlestick overlaps the white November one. It is likely that in January, the market will accelerate after a three-month treading in place.

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Indicator analysis. Daily review of the currency pair EUR / USD for December 31, 2018

Trend analysis (Fig. 1).

On Monday, the price will try again to break through the resistance line of 1.1462 (the red bold line). The probability of breaking 70% to 30%. In the case of penetration, the next target of 1.1487 is the upper fractal.

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Fig. 1 (daily schedule).

Comprehensive analysis:

- Indicator analysis - up;

- Fibonacci levels - up;

- Volumes - up;

- Candlestick analysis is neutral;

- Trend analysis - up;

- Bollinger lines - up;

- Weekly schedule - up.

General conclusion:

On Monday, the price will once again try to break through the resistance lines of 1.1459 (red bold line). If this works out (70% probability), then the next upper fractal is 1.1487, if not, then a downward movement is possible with the first target of 1.1424, a recoil level of 23.6% (yellow dotted line). Before lunch, only the bottom.

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Weekly review for the GBP / USD currency pair from December 31 to January 5, 2018

Trend analysis (Fig. 1).

This week, the price will move up with the first goal of a rolling level of 14.6% 1.2754 (yellow dotted line).

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Fig. 2 (weekly schedule).

Comprehensive analysis:

- Indicator analysis - up;

- Fibonacci levels - up;

- Volumes - up;

- Candlestick analysis - up;

- Trend analysis - up;

- Bollinger lines - down;

- Monthly schedule - up.

The conclusion of the complex analysis - upward movement.

The total sum of the calculation of the GBP / USD currency pair candle on a weekly schedule: the price of the week is likely to have an upward trend with the absence of the first lower shadow for the weekly white candle (Monday is up) and the absence of the second upper shadow (Friday is up).

This week, the price will move up with the first intermediate target, the rolling level of 14.6% 1.2754 (yellow dotted line).

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Weekly review for the EUR / USD currency pair from December 31 to January 5, 2018

We have a second holiday week, which will also be short. Last week, when moving up, it again tested the resistance line of 1.1459 (red bold line). An upward movement is possible this week, but the level of 1.1436 will put everything in its place.

Trend analysis (Fig. 1).

When moving up the first upper target is 1.1482 - 21 medium EMA (black thin line).

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Fig. 2 (weekly schedule).

Comprehensive analysis:

- Indicator analysis - up;

- Fibonacci levels - neutral;

- Volumes - up;

- Candlestick analysis is neutral;

- Trend analysis is neutral;

- Bollinger lines - down;

- Monthly schedule - up.

Conclusion of the complex analysis - upward movement.

The total result of the calculation of the EUR / USD currency pair candle on the weekly chart: the price of the week is likely to have an upward trend with the absence of the first lower shadow for the weekly white candle (Monday is up) and the absence of the second upper shadow (Friday is up).

When moving up the first upper target is 1.1482 - 21 medium EMA (black thin line).

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