Fed refused to support dollar, euro and pound are growing ahead of ECB meeting and UK elections

As expected, the US Federal Reserve decided to leave the interest rate unchanged following a meeting that ended last Wednesday. The decision was unanimous; the rate on excess reserves of banks also did not change.

Thus, it can be assumed that the Fed sends a signal to the markets that it is making a hawkish turn - the phrase regarding the uncertainty of further prospects for the rate has disappeared from the text of the accompanying statement. However, the press conference of J. Powell did not add clarity, the head of the Fed technically avoided certain answers to direct questions, reducing his speech to the formula "we are considering the entire spectrum of data".

None of the FOMC members currently forecast a rate cut in 2020. Economic forecasts have not changed much and real GDP is still expected at 2.2% in 2019, 2.0% in 2020 and 1.9% in 2021. The forecast for the underlying PCE also did not change in 2020 and 2021, but was revised from 1.8% in 2019 to 1.6%.

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Moreover, fixing rates at current levels means that the US economy will cease to receive additional support in the face of dangerously close to the recession. As a result, the Fed compensates for this step by other measures. In any case, Powell hinted that the Fed is ready to consider buying not only T-bills, but also other short-term coupon securities, if necessary.

Is there such a need? Judging by the forecasts, no since inflation, unemployment, GDP growth are at fairly confident levels. At the same time, the budget deficit in November grew to $ 209 billion. According to the Congressional Budget Committee, the deficit for the first 2 months of the fiscal year 2020 amounted to 342 billion, which is 11.7% more than a year earlier. The expenditure side of the budget is growing faster than the revenue side. The completion of the rate reduction cycle will increase the load, and the market expectedly responded to the results of the meeting with a decrease in the dollar exchange rate.

It is also necessary to proceed from the fact that not all market participants share the Fed's confidence regarding future rate changes; a number of banks believe that there will be another decrease in March. Now, what is completely clear is that the Fed will maintain liquidity at a high level. Thus, there is no intention to curtail the buyback program at 60 billion per month, so the dollar is likely to weaken in the medium term.

EUR/USD

The ZEW indicator, reflecting the economic prospects of Germany, rose markedly in December to 10.7p. The result was expected after the similar results were shown by Markit and Sentix.

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The mood in the financial markets is improving, the euro has updated its local maximum on the eve of today's meeting of the ECB, and the forecasts are positive. At the same time, no surprises are expected from the first meeting led by Lagarde. Due to this, EUR/USD is likely to consolidate above the resistance zone of 1.1109 / 15 and the chances of a return to the range are low. In turn, testing the resistance 1.1178 is possible, but there are no serious prerequisites for steady growth, and so players will wait for the outcome of the vote in the UK.

GBP/USD

The UK manufacturing sector is declining for the seventh consecutive month. The decline was 1.2% in October, which is slightly better than expected. The trade balance has worsened significantly, partly due to a marked increase in the GBP rate against September lows, to a greater extent due to a decrease in output volumes due to lower capital investments due to a high uncertainty factor.

On the other hand, NIESR believes that the UK GDP growth in November will be zero, and as a whole, the 4th quarter will give an increase of only 0.1%.

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The pound is trading at highs prior to the election, focusing on opinion polls. According to which, conservatives will get a majority in parliament and will be able to finally complete the Brexit saga. More so, the pound exchange rate largely reflects these expectations, so any signal that Johnson's victory is in jeopardy and that Labor will be able to create a coalition can bring down the pound to where it began its rapid growth a couple of months ago.

Nevertheless, a landslide victory for the conservatives could push the pound to 1.3270 / 80, however, there will be a high probability of correction against the background of profit taking, since the differences between the EU and the UK on trade relations after Brexit will come forward.

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Control zones for USD/CHF on 12/12/19

The decrease in the current week allowed the pair to break through the average move. Moreover, today's movement is near the middle course zone, which indicates the need to fix part of the short position and transfer the rest to breakeven. Purchases is not yet profitable, since the implementation of the priority model has not occurred.

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For repeated sales, it is required to have better prices. Growth to a minimum of last week will provide such an opportunity.

An alternative model will be developed if, a sharp increase in demand occurs during the test of the zone of the average weekly course. Thus, this will also allow the pair to form a local accumulation zone. The probability of the continuation of the downward movement will still be above 70%, which will allow us to go on sale at a better price in the future.

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Daily CZ - daily control zone. The zone formed by important data from the futures market that changes several times a year.

Weekly CZ - weekly control zone. The zone formed by the important marks of the futures market, which change several times a year.

Monthly CZ - monthly control zone. The zone that reflects the average volatility over the past year.

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USD weakness close to a pause?

USD has weakened as we were expecting a couple of weeks ago against almost all major currencies. It is now approaching levels where it should at least take a breath and probably pause.

GBP has been one of the best performers, adding 8.5% from October. It was under bears' control weeks ago. Now it is trading well high the 200MM. However the price range 1.3220 – 1.3330 represents an important obstacle.

EUR and AUD are facing trendlines after having given very positive signals technically. Most importantly, MM200 in both case is still negatively inclined (EUR/USD 1.1150 – 1,1180, AUD/USD 6.880 - 6.915).

USD/CHF looks quite interesting to me with some more space to the downside 9.760 – 97 area, trading at 9.825 below the MM200.

Below the DXY (Dollar Index) chart where you can draw your conclusions by yourself.

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Stay Safe

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Elliott wave analysis of GBP/JPY for December 12 - 2019

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Support at 142.37 is protecting the downside. As long as this key-support is able to protect the downside, the pair will grow and may reach the target at 144.55. This is where we are expecting red wave v and black wave iii to peak for a more prolonged correction in black wave iv.

As black wave ii was a simple a deep zig-zag correction, we should expect a much more complex and shallow correction in wave iv, due to Elliott's alternation principle.

A break below 142.37 will indicate red wave v and black wave iii has peaked and the stage now is ready for the correction in black wave iv. The minimum target for black wave iv is seen at 140.60 and likely closer at 139.30.

R3: 144.55

R2: 143.87

R1: 143.66

Pivot: 143.35

S1: 143.10

S2: 142.75

S3: 142.50

Trading recommendation:

We took profit on 50% of our long GBP position at 143.15 and booked a nice 303 pips. On the final 50% we will keep our stop at 142.25 and take profit at 144.45 if seen.

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GBP/USD. December 11. Results of the day. The probability of the Conservative Party winning with the necessary advantage

4-hour timeframe

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Amplitude of the last 5 days (high-low): 138p - 65p - 66p - 50p - 82p.

Average volatility over the past 5 days: 81p (average).

The GBP/USD currency pair resumed the upward movement today, although yesterday it went below the critical Kijun-sen line and gave hope for at least a slight correction against the upward trend, within which the pair has been in recent weeks. Today, no matter how trivial it may sound, British pound traders have completely ignored the US inflation report and are likely to ignore the conclusion of the Fed Open Market Committee meeting. But traders cheered on the information from the sociological company Yougov, which conducted another latest opinion poll, in which more than 100,000 people took part. According to this study, the Conservative Party can count on 339 mandates out of 650 possible. Thus, if the forecast from Yougov comes true, Boris Johnson's party will succeed in forming a ruling majority in the government. However, the Conservative Party's results have deteriorated compared to a previous similar study by Yougov. Earlier, Conservatives predicted victory with 359 parliamentary seats in the British Parliament. However, the most important assumption that the sociological company itself notes is that, given the margin of error, Conservatives can gain from 311 to 367 seats in Parliament. Accordingly, if the number of Conservatives in the Parliament is equal to 311, then there will be no ruling majority in the party of Boris Johnson. Accordingly, the probability of forming a ruling majority is about 70-75%. Polling stations will open tomorrow at 7:00 local time and will close at 22:00. Counting will take place all night, and on the morning of Friday the 13th (very symbolic), it will be finally known whether the Brexit issue will be resolved by the end of January 2020, or whether the Parliament will continue its work in a "hung" state, and Brexit will be delayed for another for long months and years.

But still, if you start from Yougov's research, as from completely reliable information, it's hard to imagine a situation in which even the minimum number of members of the Conservative Party in Parliament (311) could not accept the deal between Boris Johnson and the European Union and complete Brexit. In such a situation, Boris Johnson will need only 15 outside votes, which can easily be obtained, for example, from Nigel Faraj's Brexit Party. Thus, we believe that if the Conservatives do not "put a spoke on the wheel" on their own (meaning the situation in which some Conservatives refuse to vote "for" Boris Johnson's deal, as was already the case in September and October), then Brexit, most likely, will still be implemented in January 2020. Boris Johnson, of course, tried to play it safe and collected the signatures of all Conservatives who promise to vote "for" the exit from the EU, but this still does not guarantee that there is no situation in which at least a few Conservatives reject the deal with the EU. The UK will move into a new era for itself under the name of "establishing trade relations", since London will not have any trade agreements after leaving the EU. A long period of negotiations will begin. We believe that after the results of the elections to the Parliament are summed up, or maybe after the Parliament accepts a "divorce" agreement with the EU, the pound will again be prone to fall. Now it is very difficult to imagine a situation in which the pound continues to rise in price, despite the disastrous macroeconomic statistics from the UK in the last two months. Also, do not forget that in itself absolutely any Brexit is a negative for the UK economy and for the pound. Therefore, even if a "soft" Brexit scenario is implemented with a deal, this does not mean that the UK economy, which is even experiencing serious problems before it officially leaves the EU, will suddenly "blossom". Macroeconomic indicators are likely to continue to slow down, which will sooner or later provoke a fall in the British currency. Thus, we believe that in any case, the strengthening of the pound will end soon as soon as the wave of optimism about the victory of the Conservatives in the elections subsides.

From a technical point of view, the upward movement can and should continue, at least until Friday morning, when the results of the vote will be announced. At the same time, consolidating the pound/dollar pair below the Kijun-sen line will again cast doubt on the further upward movement.

Trading recommendations:

GBP/USD resumed a slight upward movement. Thus, it is now recommended to trade for an increase with the target of 1.3232. It is not advised that you consider selling the pound now, traders continue to ignore any macroeconomic data, and the pound rises in price solely on expectations of the Conservative party winning the election. Thus, it is recommended to wait for the election results, and then explore new opportunities for entering the market.

Explanation of the illustration:

Ichimoku indicator:

Tenkan-sen is the red line.

Kijun-sen is the blue line.

Senkou Span A - light brown dotted line.

Senkou Span B - light purple dashed line.

Chikou Span - green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD indicator:

Red line and bar graph with white bars in the indicator window.

Support / Resistance Classic Levels:

Red and gray dotted lines with price symbols.

Pivot Level:

Yellow solid line.

Volatility Support / Resistance Levels:

Gray dotted lines without price designations.

Possible price movement options:

Red and green arrows.

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

EUR/USD. December 11. Results of the day. Traders ignore accelerated US inflation and accusations against Donald Trump

4-hour timeframe

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Amplitude of the last 5 days (high-low): 49p - 31p - 70p - 25p - 35p.

Average volatility over the past 5 days: 42p (average).

The EUR/USD currency pair corrected as part of an upward trend to the Kijun-sen critical line on Wednesday, December 11, rebounded from it and is now trying to resume upward movement. However, a downward reversal could occur near the upper Bollinger band, because there is no upward trend as such, it is now identified as such only thanks to the Golden Cross from the Ichimoku indicator. Thus, we can only once again note the weakness of the bulls, the reluctance of the bears and the weak volatility of the currency pair. It seems that everything is returning to that paradoxical situation that we described a few weeks ago. This scenario is also supported by the complete disregard for macroeconomic statistics from the United States and the European Union. Today, only one report was published, but which one. US Consumer Price Index. Over the past six months, inflation in the United States has slowed down to 1.7% YOY, which made some traders and investors nervous, however, three consecutive rate cuts by the US Federal Reserve evened out the US data, all indicators confidently crawled up, inflation is no exception. According to a report by the Bureau of Labor Statistics, inflation in November rose to 2.1% YOY, and also added 0.3% in monthly terms. Forecasts were lower, and in itself the excess of the Fed's target inflation rate (2.0%) is a very positive factor for the United States, its economy, and the dollar. At least at first glance. In reality, traders did not believe that accelerating inflation deserves the opening of new sales of the euro/dollar pair. We believe that this is an absolutely illogical reaction of traders, since inflation is one of the most important and significant indicators of the state of any economy. It is inflation that has the strongest effect on monetary policy. And if its acceleration does not provoke a reaction of market participants, then something on the market is not in order. Only one can be out of order. Bears still do not see sufficient reasons for buying the US currency around its two summer highs (lows for the euro and the EUR/USD pair). Therefore, the market does not want to use the macroeconomic statistics, which is in favor of the US dollar. Macroeconomic statistics, which are in favor of the euro currency ... is gone. Or at least there are very few. Thus, the bulls of the euro/dollar pair have no fundamental reason to buy.

In the evening, we are still waiting for the publication of the results of the Fed meeting, the announcement of the decision on the rate, a press conference by Jerome Powell, as well as the announcement of forecasts of the main macroeconomic indicators for the next reporting periods. As we all already know, the rate will remain unchanged, forecasts of GDP, inflation and other indicators may increase compared to the previous Fed meeting, and Jerome Powell's rhetoric can be full of theses about "strong economy and labor market", "good growth rates" and the "danger of trade wars." That is, we do not expect hints from the Fed chief over a hike or reduction on the key rate. Consequently, with a probability of 90%, his rhetoric will likely be neutral and formal. Accordingly, it will also not cause any reaction among market participants, unless Powell presents a surprise. And if so, then the volatility can remain at the same "low" level today, even if there are enough macroeconomic data today.

Meanwhile, the U.S. House of Representatives voiced allegations against Donald Trump. The US president is accused of abuse of power and obstruction of Congress. A statement was made by Chairman of the Judicial Committee Jerold Nadler. Thus, now the charges have gained official status. Both charges against Trump are connected with Ukraine. The first charge alleges that President Trump delayed military assistance to Ukraine and put pressure on its president, Vladimir Zelensky, demanding that an investigation be launched into his main rival in the 2020 election, Joe Biden and his son. The second charge is related to the obstruction of the US Congress during the investigation of Trump's actions. According to the prosecution, Trump "undermined the integrity of the 2020 elections and jeopardized the country's national security." "No one, not even the president, can be above the law," Nadler emphasized. Thus, the clouds around Trump are gathering, and even if it doesn't reach impeachment, the victory in the 2020 presidential election, which Trump so wants, is floating out of his hands.

From a technical point of view, the pair may continue the upward movement, however, what will be the reaction of traders to the evening neutral meeting of the Fed, and whether it will be generally difficult to predict now. We believe that volatility will remain low, and no particularly strong reaction will follow at all. Based on this, we do not expect to see today or tomorrow a strong growth of the European currency.

Trading recommendations:

The EUR/USD pair is trying to resume the upward trend, but the chances of this are extremely small. Today it is extremely difficult to assume a continued upward movement, given that the MACD has turned down, the results of the FOMC meeting will most likely be neutral, and the bulls remain extremely weak. But sales of the euro/dollar pair will become relevant no earlier than breaking the critical line with a target of 1.1050 and only small lots.

Explanation of the illustration:

Ichimoku indicator:

Tenkan-sen is the red line.

Kijun-sen is the blue line.

Senkou Span A - light brown dotted line.

Senkou Span B - light purple dashed line.

Chikou Span - green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD indicator:

Red line and bar graph with white bars in the indicator window.

Support / Resistance Classic Levels:

Red and gray dotted lines with price symbols.

Pivot Level:

Yellow solid line.

Volatility Support / Resistance Levels:

Gray dotted lines without price designations.

Possible price movement options:

Red and green arrows.

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

Elliott wave analysis of EUR/JPY for December 12 - 2019

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The break above key-resistance at 120.68 calls for more upside progress towards 122.07 on the way higher towards 123.55. Short-term support is now seen at the former resistance at 120.68, this former resistance has now turned into support. Key-support is seen at 120.35 and a break below here will indicate a more complex correction in blue wave (ii) is developing.

R3: 122.38

R2: 121.89

R1: 121.38

Pivot: 120.93

S1: 120.68

S2: 120.56

S3: 120.35

Trading recommendation:

We are long EUR from 120.25 and we have moved our stop higher to break-even at 120.25

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

GBP/USD: plan for the European session on December 12. X day for the British pound, politics and the UK economy

To open long positions on GBP/USD you need:

So we waited for the moment when both the political and economic fate of Great Britain, as well as the British pound, can be decided in one day. UK general elections for the Parliament will be held today, in which the victory of the Conservative Party will make it possible to secede from the EU. As for trading recommendations, it is difficult to predict something. It is best to postpone pound purchases until the results are published, or consider long positions after a major downward correction to the support area of 1.3108, 1.3049 and 1.2988. If the bulls continue to push the pair up, then large resistance levels can be observed in the areas of 1.3316, 1.3375 and 1.3437, where I recommend taking profits. It does not make sense to rely on US data within the day, as they will be ignored by the market.

To open short positions on GBP/USD you need:

Pound sellers will count on the victory of the Labour Party, which will significantly weaken the position of the British pound in the short term, or on the victory of the Conservative Party, which will not be able to regain a majority in Parliament, leaving the situation as it was before the election. Pressure on the pound will return under this condition. A return below the support of 1.3161 will hit the stop orders of the bulls and push GBP/USD to the area of lows 1.3108 and 1.3049, where I recommend taking profit. In case of a further upward trend, it is best to count on short positions in the pound after updating the highs in the areas of 1.3316, 1.3375 and 1.3437.

Signals of indicators:

Moving averages

Trade is conducted above 30 and 50 moving averages, which indicates a further growth of the pound.

Bollinger bands

In case the pound falls, support will be provided by the lower boundary of the indicator at 1.3130.

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Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
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EUR/USD: plan for the European session on December 12. US dollar falls after Fed forecasts for next year

To open long positions on EURUSD you need:

The euro strengthened its position against the US dollar after yesterday's decision by the Federal Reserve to leave interest rates unchanged at 1.75%. The regulator's forecast for the next year was more important, which led to a weakening dollar, since the central bank does not plan to return to increasing the interest rates. As for the further growth prospects of EUR/USD, the bulls need to cling to the resistance of 1.1155, which will lead to the renewal of highs in the areas of 1.1180 and 1.1226, where I recommend taking profits. The European Central Bank's decision on interest rates will be published today, which may put pressure on the euro. Therefore, in the scenario of a downward correction in the morning, I recommend that you return to long positions only after a false breakout in the region of 1.1120, or buy the euro immediately to rebound from a low of 1.1090.

To open short positions on EURUSD you need:

Sellers will wait for the assessment of further economic prospects from the European Central Bank, and expect an unsuccessful consolidation above the resistance of 1.1155, which will raise the pressure on the euro and lead to a return to the support area of 1.1120. It is from this level that the further growth of EUR/USD depends. If the bears manage to gain a foothold below this range, then the pressure on the euro will increase, which will update the lows of 1.1090 and 1.1072, where I recommend taking profits. If the ECB rate remains unchanged, EUR/USD may continue to rise above the resistance of 1.1155. In this scenario, I recommend to open short positions immediately on the rebound from the highs of 1.1180 and 1.1226.

Signals of indicators:

Moving averages

Trading is conducted above 30 and 50 moving average, which keeps the chance to continue the upward trend in the euro.

Bollinger bands

Growth may be limited by the upper level of the indicator in the region of 1.1170. In case the euro falls, the lower boundary of the indicator in the area of 1.1070 will provide support.

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Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
The material has been provided by InstaForex Company - www.instaforex.com

Technical analysis: Important Intraday Levels For EUR/USD, December 12, 2019

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When the European market opens, some economic data will be released such as Monetary Policy Statement, Main Refinancing Rate, Industrial Production m/m, Italian Quarterly Unemployment Rate, German Final CPI m/m, and French Final CPI m/m. The US will also publish the economic data such as 30-y Bond Auction, Natural Gas Storage, Unemployment Claims, PPI m/m, and Core PPI m/m, so amid the reports, the EUR/USD pair will move with low to medium volatility during this day. TODAY'S TECHNICAL LEVELS: Breakout BUY Level: 1.1191. Strong Resistance: 1.1185. Original Resistance: 1.1174. Inner Sell Area: 1.1163. Target Inner Area: 1.1137. Inner Buy Area: 1.1111. Original Support: 1.1100. Strong Support: 1.1089. Breakout SELL Level: 1.1083. (Disclaimer)The material has been provided by InstaForex Company - www.instaforex.com

Technical analysis: Important Intraday Levels for USD/JPY, December 12, 2019

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In Asia, Japan will release the Core Machinery Orders m/m and the US will publish some economic data such as 30-y Bond Auction, Natural Gas Storage, Unemployment Claims, PPI m/m, and Core PPI m/m. So there is a probability the USD/JPY pair will move with low to medium volatility during this day. TODAY'S TECHNICAL LEVELS: Resistance.

3: 109.08. Resistance. 2: 108.86. Resistance. 1: 108.62. Support. 1: 108.39. Support. 2: 108.18. Support. 3: 107.96.(Disclaimer)

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

Forecast for EUR/USD on December 12, 2019

EUR/USD

The Federal Reserve's monetary policy release yesterday turned out to be a bit more hawkish than expected — the closest rate change will take place no earlier than the spring of 2021, which can be mistaken for official recognition not to change rates just before the presidential election. Economic forecasts were unchanged: GDP 1.9% in 2021, inflation 2.0%. The euro jumped by 40 points with the release. The speech of Fed Chairman Jerome Powell was neutral, in fact, he declared the provisions of already issued forecasts. Furthermore, the euro has not changed in value. Thus, we accept the growth as speculative, to the nearest target of 1.1155 (110.0% of the Fibonacci level on the daily chart), there is around 20 points from the current moment. A downward price movement is possible from this level, albeit with a low probability

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But the market has another goal, just above the Fibonacci level - this is a strong price level of 1.1180 - October 21 high, June 18 low and March 7 low. By inertia, growth can continue to this level.

The ECB will make a decision on monetary policy today. No changes are expected here. General elections for the UK Parliament are also held today. Probably, against this background, speculators will refrain from active actions. We look forward to increasing volatility with the advent of the first results on Friday night. And even here, the first reaction of the market over the next day can be purely speculative. The problems of the moment in the likelihood of getting a "hung" Parliament in the event that the Conservatives do not gain the predicted 340 seats. In this case, the story will drag on with the formation of coalitions and other difficulties in solving the main task - in forming a deal with the EU.

As a result of the next stage of increasing speculative sentiment, it is likely that the price will overcome the signal level of 1.1180 and the euro will rise to the Fibonacci level of 100.0% at the price of 1.1215. And of course, in our main scenario, the price can break yesterday's low, which coincides with the Fibonacci level of 123.6%, and fall to the Fibonacci level of 138.2% at the price of 1.0985.

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The price is above the indicator lines of balance and MACD on the four-hour chart, the signal line of the Marlin oscillator is growing, but it is possible for a divergence to form, that is, the duality of the scenarios is confirmed.

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Forecast for GBP/USD on December 12, 2019

GBP/USD

The British pound reached the target level of 1.3206 at the Fibonacci level of 200.0% for the second time yesterday, while also managing to overcome it this morning. The target opens at the Fibonacci level of 223.6% at the price of 1.3352. Continued growth does not negate the likelihood that a divergence could be formed later, across Marlin with a corresponding market turn down.

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General elections for the UK Parliament are held today. The problem of the whole campaign is the likelihood of getting a "hung" Parliament if Conservatives do not gain the predicted 340 seats. In this case, the story will drag on with the formation of coalitions and other difficulties in solving the main task - in forming a deal with the EU.

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The situation is completely upward on the four-hour chart: the price above the balance and MACD lines, the Marlin oscillator in the zone of positive numbers.

So, we look forward to the British pound's continued growth to the first target of 1.3352. Overcoming this goal opens the second target of 1.3440 at the Fibonacci level of 238.2%. The first sign of a pound reversal will be a price fall below the MACD line at H4 (1.3140), after which we expect the price to return to the October-November support of 1.2968, which coincides with the Fibonacci level of 161.8%.

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

Forecast for AUD/USD on December 12, 2019

AUD/USD

The aussie grew by 67 points on Wednesday amid a general weakening of the US dollar, reflecting from the MACD line on the daily chart and overcoming the resistance of the embedded price channel line. The Marlin oscillator is showing steady growth. The Australian dollar is currently aiming for the high of November 5 at a price of 0.6930. Overcoming this level opens the second target at 0.6955 - an embedded line of the falling price channel.

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The price rises above the balance and MACD lines, the Marlin oscillator in the zone of positive numbers.

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

GBP/USD right below resistance, huge downside potential!

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Trading Recommendation

Entry: 1.321

Reason for Entry: Graphical swing high

Take Profit : 1.3064

Reason for Take Profit: 38.2% Fibonacci retracement

Stop Loss: 1.33340

Reason for Stop loss:

horizontal swing high resistance

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

USD/CAD Further drop expected!

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Trading Recommendation

Entry: 1.3180

Reason for Entry: 23.6% Fibonacci retracement

Take Profit : 1.31

Reason for Take Profit:

78.6% Fibonacci retracement, 100% Fibonacci extension

Stop Loss: 1.327

Reason for Stop loss:

Graphical Swing high

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

USD/CHF approaching support, potential bounce!

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Trading Recommendation

Entry: 0.9815

Reason for Entry: 61.8% Fibonacci extension

Take Profit : 0.9918

Reason for Take Profit: horizontal pullback resistance

38.2% Fibonacci retracement

Stop Loss: 0.9733

Reason for Stop loss:

horizontal swing low support

78.6% Fibonacci retracement

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

Fractal analysis of the main currency pairs for December 12

Forecast for December 1 :

Analytical review of currency pairs on the scale of H1:

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For the euro / dollar pair, the key levels on the H1 scale are: 1.1198, 1.1170, 1.1144, 1.1114, 1.1096, 1.1065 and 1.1024. Here, we are following the development of the upward cycle of November 29. The continuation of the movement to the top is expected after the breakdown of the level of 1.1144. In this case, the target is 1.1170. Price consolidation is near this level. For the potential value for the top, we consider the level of 1.1198. Upon reaching this value, we expect a rollback to the correction.

Short-term downward movement is expected in the range 1.1114 - 1.1096. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 1.1065. This level is a key support for the upward structure.

The main trend is the upward structure of November 29

Trading recommendations:

Buy: 1.1145 Take profit: 1.1170

Buy: 1.1172 Take profit: 1.1196

Sell: 1.1114 Take profit: 1.1097

Sell: 1.1094 Take profit: 1.1066

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For the pound / dollar pair, the key levels on the H1 scale are: 1.3290, 1.3249, 1.3217, 1.3172, 1.3146, 1.3102, 1.3075 and 1.3025. Here, the price forms a local potential for the top of December 11. Short-term upward movement is expected in the range of 1.3217 - 1.3249. The breakdown of the last value will lead to a movement to a potential value - 1.3290. Price consolidation is near this level.

A short-term downward movement is possibly in the range of 1.3172 - 1.3146. The breakdown of the last value will lead to a long correction. Here, the target is 1.3102. The range 1.3102 - 1.3075 is a key support for the upward trend and its passage in price will lead to the development of a downward structure. In this case, the first potential target is 1.3025.

The main trend is the upward cycle of November 27, the local structure of December 11

Trading recommendations:

Buy: 1.3217 Take profit: 1.3247

Buy: 1.3250 Take profit: 1.3290

Sell: 1.3172 Take profit: 1.3147

Sell: 1.3144 Take profit: 1.3104

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For the dollar / franc pair, the key levels on the H1 scale are: 0.9915, 0.9884, 0.9864, 0.9820, 0.9789 and 0.9745. Here, we are following the development of the downward structure of November 29. The continuation of movement to the bottom is expected after the breakdown of the level of 0.9820. In this case, the target is 0.9789. Price consolidation is near this level. The breakdown of the level of 0.9789 should be accompanied by a pronounced downward movement. In this case, the potential target is 0.9745. We expect a rollback to correction from this level.

Short-term upward movement is possibly in the range of 0.9864 - 0.9884. The breakdown of the latter value will lead to in-depth movement. Here, the target is 0.9915. This level is a key support for the downward structure of November 29.

The main trend is the downward structure of November 29

Trading recommendations:

Buy : 0.9864 Take profit: 0.9883

Buy : 0.9885 Take profit: 0.9913

Sell: 0.9820 Take profit: 0.9791

Sell: 0.9787 Take profit: 0.9745

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For the dollar / yen pair, the key levels on the scale are : 109.31, 109.06, 108.85, 108.58, 108.31, 108.10, 107.80 and 107.62. Here, we are following the descending structure of December 2. Short-term movement to the bottom is possibly in the range 108.31 - 108.10. The breakdown of the last value will lead to a pronounced movement. Here, the goal is 107.80. For the potential value for the bottom, we consider the level of 107.62. Upon reaching which, we expect consolidation, as well as a rollback to the top.

Short-term upward movement is expected in the range 108.85 - 109.06. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 109.31. This level is a key support for the downward structure.

Main trend: descending structure of December 2

Trading recommendations:

Buy: 108.85 Take profit: 109.04

Buy : 109.08 Take profit: 109.30

Sell: 108.30 Take profit: 108.12

Sell: 108.08 Take profit: 107.80

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For the Canadian dollar / US dollar pair, the key levels on the H1 scale are: 1.3256, 1.3217, 1.3196, 1.3146, 1.3118 and 1.3094. Here, the price has canceled the formation of the upward potential and at the moment, we are setting targets for the downward trend from the long-term structure on December 3. The continuation of movement to the bottom is expected after the breakdown of the level of 1.3146. Here, the target is 1.3118. Price consolidation is near this level. For the potential value for the bottom, we consider the level of 1.3094. Upon reaching which, we expect a consolidated movement.

Short-term upward movement is possibly in the range of 1.3196 - 1.3217. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 1.3256. We expect the expressed initial conditions to formulate for the upward cycle up to this level.

The main trend is the long-term descending structure of December 3

Trading recommendations:

Buy: 1.3196 Take profit: 1.3215

Buy : 1.3218 Take profit: 1.3252

Sell: 1.3145 Take profit: 1.3119

Sell: 1.3116 Take profit: 1.3095

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For the Australian dollar / US dollar pair, the key levels on the H1 scale are : 0.6980, 0.6957, 0.6922, 0.6894, 0.6858, 0.6843, 0.6820 and 0.6797. Here, the subsequent goals for the top we determine from the local structure on December 10. The continuation of the movement to the top is expected after the breakdown of the level of 0.6894. In this case, the target is 0.6922. Price consolidation is near this level. The breakdown of the level of 0.6922 should be accompanied by a pronounced upward movement. Here, the target is 0.6957. We consider the level of 0.6980 to be a potential value for the upward trend, and upon reaching this level, we expect a pullback to the bottom.

Short-term downward movement is expected in the range of 0.6858 - 0.6843. The breakdown of the last value will lead to an in-depth correction. Here, the target is 0.6820. This level is a key support for the upward structure. Its breakdown will allow you to count on movement to the first potential target - 0.6797.

The main trend is the local structure for the top of December 10

Trading recommendations:

Buy: 0.6895 Take profit: 0.6920

Buy: 0.6924 Take profit: 0.6955

Sell : 0.6858 Take profit : 0.6844

Sell: 0.6841 Take profit: 0.6822

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For the euro / yen pair, the key levels on the H1 scale are: 121.45, 121.25, 120.98, 120.76, 120.35, 120.17, 119.93 and 119.66. Here, we are following the development of the ascendant structure of December 9. Short-term upward movement is expected after the breakdown of the level of 120.76. In this case, the target is 120.98. Price consolidation is near this level. The breakdown of the level of 121.00 should be accompanied by a pronounced upward movement. Here, the goal is 121.25. For the potential value for the top, we consider the level of 121.45. Upon reaching which, we expect a rollback to the correction.

Corrective movement is possibly in the range of 120.35 - 120.17. The breakdown of the last value will have the downward development of December 5, and in this case, the first goal is 119.93. For the potential value for the bottom, we consider the level of 119.66.

The main trend is the upward structure of December 9

Trading recommendations:

Buy: 120.76 Take profit: 120.96

Buy: 121.00 Take profit: 121.25

Sell: 120.35 Take profit: 120.20

Sell: 120.15 Take profit: 119.95

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For the pound / yen pair, the key levels on the H1 scale are : 144.56, 144.06, 143.45, 143.09, 142.50, 142.06 and 141.51. Here, we are following the ascending structure of December 4. Short-term movement to the top is expected in the range of 143.09 - 143.45. The breakdown of the last value will lead to a pronounced movement. Here, the goal is 144.06. For the potential value for the top, we consider the level of 144.56. Upon reaching this value, we expect consolidation, as well as a pullback to the bottom.

Short-term downward movement is possibly in the range of 142.50 - 142.06. The breakdown of the last value will lead to an in-depth correction. Here, the goal is 141.51. This level is a key support for the top.

The main trend is the local ascending structure of December 4

Trading recommendations:

Buy: 143.10 Take profit: 143.44

Buy: 143.50 Take profit: 144.06

Sell: 142.50 Take profit: 142.10

Sell: 142.04 Take profit: 141.54

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EURUSD: US interest rates are unlikely to change. Focus is on the Fed statement and quarterly forecasts

The decision of the US Federal Reserve is likely to lead only to a slight strengthening of the US dollar against a number of world currencies, however, provided that the committee leaves interest rates unchanged within the current range of 1.5% -1.75%. More attention will be focused on the Fed statement, from which we can draw conclusions about the future prospects of the economy and interest rates. It is also expected that quarterly long-term forecasts will be given at the meeting.

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Much will depend on how inflation shows itself today. If the report is better than economists' forecasts, it is likely that the Fed will take a break in the cycle of lowering interest rates. If prices remain at the same levels or even worse, they fall below economists' forecasts, then the central bank will continue to lower rates in the coming months.

An additional bonus is November data on US employment, which could make some Fed leaders skeptical about rates change their minds. Let me remind you that just recently, during his speech, Fed Chairman Jerome Powell announced a series of interest rate cuts this year as a mid-cycle correction. This suggests that after the stabilization of the situation, the Fed could begin to raise rates to the target value, or higher.

A number of negative forecasts given by global economic agencies in the event that the United States and China fail to come to an agreement negatively affect risky assets. Even if trade conflicts are resolved, in 2020 US GDP growth will still slow to 2.1% from the projected 2.4% this year. However, global economic growth may accelerate to 3.4% in 2020, from 3.0% in 2019.

Considering that no important fundamental data were released today in the morning, nothing has technically changed in the EURUSD pair. The bulls did not even try to break above the resistance of 1.1100, which was quite expected before the Fed's decision on interest rates. The whole calculation will be on inflation in the US and on the Fed's decision on interest rates. The return of the trading instrument to support 1.1075 may increase the pressure on the pair, which will lead to its decline in the area of lows 1.1050 and 1.1030.

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The latest report on consumer sentiment in Australia showed a deterioration in December this year. The consumer sentiment index fell to 95.1 points in December from 97.0 points in November, which casts doubt on the effect of lowering interest rates. The RBA said that the index is consistent with data indicating weak consumer demand.

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Euro - a box with a surprise?

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The euro does not cease to amaze the market. The single currency remained on the sidelines more recently, trying to keep up with the dollar, and now claims to be the first in the EUR/USD pair. Analysts are considering an option in which the dynamics of the euro, which was previously declining, will increase.

Experts from a number of major banks positively assess the prospects of the euro in the coming year. Morgan Stanley forecasts that the euro will rise by almost 5% to $1.1600, while experts at ABN Amro Bank NV and Commerzbank AG expect growth to $1.1400 by the end of March 2020. However, such a rise in the Euro currency is possible only with stabilization of the eurozone economy and clarification of the situation with Brexit, analysts emphasize.

Potential changes in the ECB policy can also make adjustments to the dynamics of the euro. The new head of the regulator, Christine Lagarde, is convinced of the need to strengthen budgetary incentives to maintain economic growth and inflation in the region. Analysts do not exclude that in the medium term the ECB will have to adjust its inflation target to 2%. This will entail a number of large-scale changes, and the market will have to lay in the price the rejection of negative interest rates that apply in the eurozone. If this scenario is realized, the euro will lose its attractiveness as a funding currency, experts said. This will negatively affect the mood of investors, and they will have to consider other options for using the single currency.

Many market participants believe that the euro's use as a funding currency for carry-trade transactions has come to an end. We note that this year the single currency was actively used as part of this strategy and made a profit when investing in 20 of 23 currencies of developing countries, note in the Bloomberg agency.

The euro was also supported by a positive report on the eurozone business sentiment index, published on Tuesday, December 10. It turned out to be much higher than the forecasts of economists, as well as data on the index of economic expectations in Germany. According to a document presented by the ZEW Science Center, the index of economic expectations soared to 10.7 points in December from the -2.1 points recorded in November 2019. According to ZEW experts, the large-scale growth of the index is due to the high probability of an increase in exports and an increase in personal consumption in Germany. Positive dynamics was demonstrated by the index of current economic conditions and the mood index in the business environment of the eurozone. The ZEW report said that the mood in the business environment of the region climbed to 11.2 points compared to -1.0 points recorded in November 2019.

According to analysts, the dynamics of the European currency may be affected by any signals from the leadership of the US Federal Reserve or the European Central Bank. This impact will be negative if regulators' plans for monetary policy change dramatically. Such changes can provoke an explosive increase in the volatility of the dollar and the euro and trigger another rally of the EUR/USD pair.

Currently, the EUR/USD pair is in a global downward trend, which will continue next year, experts said. The classic pair was not very active on Tuesday, December 10, cruising near the levels of 1.1078–1.1079.

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The EUR/USD pair started at 1.1081 this morning, showing a slight upward trend.

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The pair traded near the levels of 1.1084–1.1085, not showing much activity. Experts believe that this lull is deceptive. The euro, paired with a greenback, is like a predator hiding in ambush and waiting in the wings.

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According to analysts, the euro has not yet revealed all its trump cards. The European currency is able to show rapid growth and catch up in the short and medium term. Specialists are confident in the enormous potential of the single currency, which can be fully revealed in the coming year.

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X hour for the pound: volatility intensifies

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The British currency is at the forefront of controversy. On the one hand, it is trying to hold on to its positions, and on the other, it is experiencing tremendous tension in connection with the upcoming elections. The market is on the same wavelength with the pound, paused in anticipation of changes in the political arena of Great Britain.

The epicenter of events at the moment are the elections that will be held in the country on December 12. On Tuesday, December 10, reports were published showing the state of the UK economy. Experts recorded the absence of any significant changes, including economic growth. According to analysts, this indicates problems associated with Brexit. At the same time, the pound completely ignored these data, focusing on the upcoming results of opinion polls and the expectation of elections.

It is expected that a new government will be formed during the elections. Experts believe that Prime Minister Boris Johnson will remain in his post and head the government of Conservatives. At the same time, analysts recall that the Conservative Party will require a majority in Parliament to resolve the situation with the Brexit. In the event of the implementation of such a scenario, Johnson will be able to agree on a deal with the EU in a short time and withdraw Great Britain from the European Union by January 31, 2020. According to experts, such a development of events for Great Britain will be a long-awaited way out of the political impasse in which the country has been for more than two years.

Current turmoil and pre-election tension do not reflect well on the dynamics of the pound. Sterling keeps the bar set, fueled by the results of public opinion, confident in the majority vote of the ruling Conservative Party of Great Britain. On Tuesday, the pound tried to maintain its position, but on Wednesday, December 11, it became clear that this attempt failed. Experts expect a downward correction of the GBP/USD pair, which can be stopped by a large support level of 1.3090.

The British currency confidently conquered peak after peak on Tuesday, December 10. The GBP/USD pair ran in the range of 1.3172-1.3173, with attempts to move higher.

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At some point, the pair managed to reach 1.3180, but this turned out to be the highest level. Subsequently, the pound began a downward movement, and the GBP/USD pair lost its advantages.

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The GBP/USD pair began on a minor note this morning, showing a significant decrease to levels of 1.3122-1.3123. The pair's further trend was downward.

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The pair went to the levels of 1.3115-1.3116 in an effort to find the bottom. Now the pair runs in this range, trying to get out of tight boundaries.

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Many experts believe that after the election the situation will not be in favor of the pound. Sterling can significantly subside, and it will take a long time to restore it. However, a number of analysts refrain from negative forecasts, preferring to trust the British currency, which has repeatedly demonstrated stability.

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GPB/USD. Pound dilemma: will Britain be able to implement Brexit in the near future, or will it remain hostage to the "suspended

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According to some experts, the pound's rally on the expectations of the Conservative Party victory in the upcoming parliamentary elections in the UK makes it vulnerable to a fall in the actual voting results.

Undecided voters will not need much effort to turn the strong majority of Conservatives into a weak one, they said.

The pound has risen by about 6% over the past two months, as investors see the Tory's potential victory only as a positive.

"We believe that the markets are far ahead of the events, laying down the quotes for Conservatives to receive a significant majority in the House of Commons," said Mark Dowding of BlueBay Asset Management.

"These elections remain quite unpredictable. Although the confident victory of the Tories seems the most likely result, we do not think that surprises can be ruled out, "he added.

The pound has been acting as a market barometer of political risk since the Brexit 2016 referendum. Having reached an almost three-year low in early September, the GPB/USD pair recovered on the expectation that British Prime Minister Boris Johnson's tactics for holding early elections could be justified if he manages to push through a "divorce" agreement with the EU through the national Parliament.

According to the latest YouGov poll, Conservatives can count on 42.6% of the vote and Labor on 33.8%.

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Toronto-Dominion Bank estimates the probability of a major victory for the Conservative Party at 55%, but believes that this scenario has already been put in quotes.

"Confirmation of the confident majority of Tories can lead to a sharp upward movement in the pound, however, it is vulnerable to sell by fact against the background of profit taking and crowding out obsolete positions after the election results are known," said bank expert Ned Rumpeltin.

For strategists who bet on a Conservative victory, now it all depends on how many seats the latter can get: the more solid the majority of Tories are, the less likely it is that the Parliament will again be at an impasse and will not be able to approve the Brexit deal promoted by Johnson.

His predecessor, Theresa May, did not have a majority in Parliament and was forced to resign because her version of the Brexit deal was repeatedly rejected by lawmakers.

"A small Conservative majority is likely to ratify the divorce agreement, but Johnson may not have enough political freedom to extend the transition. In this case, the prospect of the absence of a trade deal at the end of 2020 will lead to a drop in the pound," said Andrew Wishart, a specialist in Capital Economics.

It is also likely that Conservatives will not get a majority in Parliament at all, which will open the door for Labour to form a coalition with small British parties.

Some market participants believe the Labour-led coalition is ultimately good for the British currency, since Labour leader Jeremy Corbyn has promised to keep the UK in EU Customs Union and put forward a new Brexit deal for a second referendum, but his leftist views imply that the pound may come under pressure in the short term. According to Kenneth Brooks, a strategist at Societe Generale, if this scenario is realized, a decrease in the rate of the British currency to $1.28 may follow.

Polling stations in the UK will open on Thursday, December 12, at 07:00 GMT and close at 22:00. The vote count will go on all night, and by Friday morning it will become clear whether the UK will have a chance in the near future to solve the Brexit dilemma and take a step forward, or whether the country will remain hostage to the "suspended Parliament".

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Gold holds a punch

The publication of the US labor market report for November was a real disaster for gold. An increase in employment by 266 thousand, a fall in unemployment to 3.5%, the lowest mark for half a century, and an acceleration of average wages to 3.1% YOY led to an increase in the S&P 500 of more than 1%, to a strengthening of the US dollar and an increase in profitability treasury bonds. This created an extremely unfavorable environment for the precious metal, which could not gain a foothold within the previous consolidation range of $1475-1515 per ounce.

The value of gold increased by 12% in 2019. This is the best result since 2010. The precious metal is ahead of the Bloomberg commodity market index and is poised to end in the positive for the third year out of the last four. The reasons should be sought in the uncertainty associated with the trade war and Brexit, as well as in the three acts of monetary expansion of the Fed. However, the picture could seriously change in 2020. Washington and Beijing are close to a deal, and Britain is about to leave the EU. The recovery of the economies of China, the eurozone and Great Britain improves the prospects for equity markets, real estate and industrial metals. However, not everyone thinks so.

Dynamics of gold and commodity index

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Goldman Sachs and UBS forecast a gold rally to the level of $1,600 per ounce, which was last seen in 2013. BlackRock calls the precious metal the best option for hedging the risks associated with the correction in the stock markets. Bulls on XAU/USD expect that the period of low inflation, which falls short of the targets, will continue for a very long time, and under such conditions, central banks will remain prone to ultra-soft monetary policy. An increase in geopolitical and political risks, including those associated with the US presidential election, will lead to pullbacks in the S&P 500, which is usually perceived by investors as a deterioration in global risk appetite and is fraught with increased demand for safe haven assets. No wonder ETF fans are in no hurry to get rid of their products, even in the face of falling XAU/USD quotes.

Gold ETF Stock Dynamics

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Investment demand for gold is quite large. Along with interest in specialized exchange-traded funds, central banks show increased activity, which, according to Goldman Sachs, bought up about 20% of the global precious metals supply in the de-dollarization process. Assets like US Treasury bonds are not well suited to implement the idea of reducing dependence on the protectionist states of the United States. Gold is another matter.

There is no clarity on the outcome of the trade war. Both sides claim that they are moving towards an agreement, but the White House has repeatedly surprised investors with unexpected escalations in the conflict with China. Who can guarantee that the same will not happen in mid-December?

Technically, the bulls for gold leave no hope to return quotes within the previous consolidation range of $1475-1515 per ounce. It will turn out - it will be possible to count on the activation of the Expanding Wedge pattern and on implementing the target by 161.8% according to the Crab pattern. No - risks of the precious metal falling to $1435-1440 will increase.

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