Indicator analysis: Daily review on December 19, 2019, on GBP / USD currency pair

The pair continued to move downward on Wednesday, reaching 21 average EMA which is equivalent to 1.3080 presented in a black thin line. Strong calendar news is expected for the pound on Thursday at 09:30 and 12:00 UTC and for the dollar at 13:30 and 15:00 UTC. Also, the market may move down, but much will depend on the news that comes out at 12:00 UTC about interest rates.

Trend analysis (Fig. 1).

On Wednesday, the price may continue to move down with the first target of the support line 1.3050 presented in a white bold line. In case of breaking this line, the next lower target 1.2979 is the support line in red bold line.

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Fig. 1 (daily chart).

Comprehensive analysis:

- Indicator analysis - down;

- Fibonacci levels - down;

- Volumes - down;

- Candlestick analysis - down;

- Trend analysis - down;

- Bollinger Lines - down;

- Weekly schedule - down.

General conclusion:

On Wednesday, the price will continue to move down.

Another scenario is also possible, where, from the support line 1.3050 presented in a white bold line, work up with the target of 1.3284 the resistance line presented in a black bold line. Much will depend on the news that comes out at 12:00 UTC about interest rates.

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Technical analysis of GBP/USD for 19/12/2019:

Technical Market Overview:

The battle of 61% Fibonacci retracement on the weekly timeframe on GBP/USD has been lost by bulls. The bears have managed to push the prices below the technical support located at the level of 1.3101 and made a new local low at the level of 1.3059. Moreover, the price fell out of the old main channel as well, which additionally indicates the strength of the bearish move. The next target for bears is seen at the level of 1.3039 and the immediate technical resistance is seen at the level of 1.3131.

Weekly Pivot Points:

WR3 - 1.4019

WR2 - 1.3748

WR1 - 1.3564

Weekly Pivot - 1.3301

WS1 - 1.3081

WS2 - 1.2836

WS3 - 1.2626

Trading Recommendations:

The best strategy for current market conditions is to trade with the larger timeframe trend, which is up. All downward moves will be treated as local corrections in the uptrend. In order to reverse the trend from up to down, the key level for bulls is seen at 1.2756 and it must be clearly violated. The key long-term technical support is seen at the level of 1.2231 - 1.2224 and the key long-term technical resistance is located at the level of 1.3509.

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Technical analysis of EUR/USD for 19/12/2019:

Technical Market Overview:

The EUR/USD pair trades below the short-term trend line support as well (thick orange line) as the bearish pressure increases. The bulls are still in control of the market, at least at the lower timeframes, but bears have managed to make another lower low at the level of 1.1110 and in the near term they might push prices even lower towards the level of 1.1087. Although the higher timeframes trend remains bearish, the global investors must take into account, that the EUR/USD might be finally breaking up from the multi-month Ending Diagonal pattern.

Weekly Pivot Points:

WR3 - 1.1337

WR2 - 1.1267

WR1 - 1.1190

Weekly Pivot - 1.1121

WS1 - 1.1048

WS2 - 1.0978

WS3 - 1.0897

Trading Recommendations:

The best strategy for current market conditions is to trade with the larger timeframe trend, which is down. All upward moves will be treated as local corrections in the downtrend. The downtrend is valid as long as it is terminated or the level of 1.1445 clearly violated. There is an Ending Diagonal price pattern visible on the larget timeframes that indicate a possible downtrend termination soon. The key short-term levels are technical support at the level of 1.1040 and the technical resistance at the level of 1.1267.

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GBP/USD and EUR/USD: the Bank of England may change the course of monetary policy at this meeting. The implementation of

Today is an important day for the British pound, as it fell heavily against the US dollar, losing all the positions it won after the victory of the Conservative Party of Great Britain. Many expected the pound to continue growing after a slight downward correction, however, this week's reports indicate a slowdown in economic growth. Moreso, the actions of the British Prime Minister related to the Brexit agreement, frightened investors, which led to a downward correction of the trading instrument. It has long been said that the British pound is significantly overbought, and that a downward correction is expected in due time. As always, the market went against the expectations of speculative traders.

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Today, the pound's direction depends on the decision of the Bank of England. In my past reviews, I have repeatedly mentioned the possibility of interest rate cuts as early as next year, which is the point that will be given full attention on today's meeting. At least two members of the Committee are expected to vote to lower the interest rate, which will shake the current course of monetary policy. Many world economic agencies already say that the Bank of England is likely to lower interest rates in 2020, rather than raise them, as it was also stated at the last meeting. Such a decision will put pressure on the British pound and will constrain the yield of short-term UK government bonds.

Of course, during today's meeting, the Committee may maintain a wait-and-see position in the short term, however, such decision will likely be the first signal to the revision of policy in the future, which will weaken the position of the pound . The Bank of England is forecasted to cut interest rates by 25 basis points in May 2020.

Also note that the situation with Brexit delivers not a few problems. The recent hints of the government, in the person of Boris Johnson, saying that the measures of fiscal stimulus will not be implemented soon, may force the Bank of England to file a memorial to lower the key interest rate in the coming months.

As for the technical picture, the GBPUSD pair remains unchanged, and their further direction will depend on how traders will act in the support area of 1.3060 and in the resistance area of 1.3135. A break of 1.3060 will increase the pressure on the trading instrument, and will quickly push it into the area of new lows at 1.3000 and 1.2950. If the Bank of England remains in the same course, there is a possibility in returning to the resistance of 1.3135, which will hit the stop orders of sellers and throw GBP / USD higher to the highs of 1.3200 and 1.3260.

EUR / USD

Yesterday WSJ economists published a survey regarding the situation in the labor market. It said that the market will remain favorable, allowing US GDP to demonstrate growth in the 4th quarter at 2.2% per annum. US growth is also forecasted to slow to 1.8% in 2020, but the likelihood of a recession has declined.

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The New York Federal Reserve Bank President John Williams, on his speech in CNBC, also did not make a novelty in the expectations associated with the course of Fed policy. He noted that the economy in 2020 will demonstrate the same good dynamics as in 2019, and the task of the Fed is to maintain the economy on its current course. As for the results of 2019, according to the representative of the Fed, the Commission has effectively adjusted policy, and the current course of monetary policy is now correct.

Experts are still talking about the trade agreement, where the first phase of which was allegedly concluded at the end of last week. It is already clear that the sentiment in the agricultural sector has improved slightly, as many market participants are skeptical about China's promises.

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If we analyze these past years, the maximum export of agricultural products from the United States to China was recorded in 2014, with the figure approaching 25 billion dollars. How the Chinese side will seek to increase this figure to $ 50 billion remains a mystery. Some economists believe that in order to reach the declared target, the Chinese government needs to allow American energy exports to its market and open up the services market, which clearly, no one will do.

Of course, no one will rush into conclusions on the deal, since two years are allocated for its implementation and increase in export volumes. It is only after the presidential elections in the United States, which will be held at the end of 2020, will judgement on whether China has managed to fulfill its obligations be possible.

As for the technical picture of EUR / USD, the pair's situation has not changed significantly. The bears managed to push the market to their side, but failed to form a larger downward trend. While trading is conducted below the resistance of 1.1135, which acts as the middle of the side channel, we can expect a decrease in the trading instrument in the area of lows 1.1090 and 1.1040. If the bulls manage to get to the level of 1.1135 and get the help from fundamental statistics that can be expected only in the second half of the day, sellers of risky assets will most likely retreat from the market and allow it to update the upper boundary of the side channel in the area of 1.1175.

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Trading plan for EUR/USD and GBP/USD on 12/19/2019

Donald Trump brought the entire German business into a state of light panic, which was reflected in the form of an unreasonable weakening of the single European currency, which also pulled the pound. The fact is that the President of the United States signed the Pentagon budget for next year, which includes measures to counteract the construction of Nord Stream 2. It is no secret to anyone that Germany, or rather German business, will receive a tremendous advantage in the form of a significant reduction in energy costs, as soon as the gas pipeline is fully operational. In addition, Germany itself will receive an excellent instrument of influence on other European countries, since they will now receive gas through it. Due to this, the actions of the United States are perceived by German business as extremely hostile and potentially causing serious economic damage. In this regard, the general weakening of the single European currency is not surprising. Thus, investors are worried and see rising risks.

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At the same time, there were in fact no real economic reasons for weakening the single European currency. And Nord Stream 2 itself will be completed. The only question is what sanctions will be imposed on those or other companies participating in the implementation of this project. Meanwhile, inflation in Europe accelerated from 0.7% to 1.0%, which is nothing but rejoice, because there were fears that inflation would be slightly less noticeable until the last moment. Indeed, the pace of decline in producer prices in Germany accelerated from -0.6% to -0.7%. In addition, the volume of construction in Europe increased by 0.3%, while the decline of the previous month was revised from -0.7% to -0.3%. Therefore, the single European currency really had an occasion for optimism.

Inflation (Europe):

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Honestly, the pound had also no reason to weaken, as inflation remained stable, and did not fall from 1.5% to 1.4%. However, Boris Johnson's brilliant idea of a legislative ban on extending the transition period, which will begin on February 1, continues to put pressure on the pound. This should last about a year. During this time, the UK and the European Union must sign all the necessary documents governing their interaction, but already in a situation where the United Kingdom is not a resident of a pan-European hostel. However, investors fear that this time will not be enough to agree on the most pressing issues, on which there is still no understanding. We are talking about the border between Ireland and Northern Ireland, as well as trade and customs duties with all sorts of quotas and technical regulations.

Inflation (UK):

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Today, Britain will be in focus again, but not because of a meeting of the Bank of England board. The fact is that Mark Carney has long explained to everyone that there should be no changes in the interest rate policy of the regulator before Brexit. In the light of Boris Johnson's latest initiatives, these words can be interpreted as saying that nothing will change before the end of the transition period. Morally, investors are ready for this, and it is clear that no reaction to the next inaction of the Bank of England will follow. Despite this, retail trade is of interest. The growth rate of which should slow down from 3.1% to 2.1%. Such a significant decline in consumer activity is not even offset by the constancy of inflation, so the pound will obviously be under pressure.

Retail Sales (UK):

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At the same time, the dollar itself will have reasons for joy and not bad. In particular, even if the number of repeated applications for unemployment benefits should increase by 18 thousand, the number of initial applications for unemployment benefits can be reduced by 33 thousand, that is, in general, the number of applications for unemployment benefits can be reduced by 15 thousand In addition, home sales should increase by 0.8% in the secondary market. Thus, in general, expectations are quite optimistic according to American statistics.

Secondary Home Sales (United States):

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The euro/dollar currency pair found a variable support in the form of a local minimum on December 13, where it formed a stagnation with a subsequent rollback. Thus, it is likely to assume a chatter variable within the values of 1.1110/1.1135, where the work will be arranged according to the "breakdown of borders" method.

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The pound/dollar currency pair maintains downward interest, but the past day was reflected in a characteristic stagnation. Thus, it is likely to assume a temporary chatter, where the psychological level of 1.3000 will play a key role in case of breakdown.

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Trading plan on EUR/USD for December 19. Trump's impeachment weighs in on markets

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Trump's impeachment instigated a negative impact on the markets. The lower house of Congress passed an impeachment of Trump late Wednesday, however, it is far from a settled issue, as the key in an impeachment vote lies on the upper house or the Senate. The US Senate, however, is mostly consisted of Republicans, thus, it is most likely that in the end, impeachment will not pass.

There is no other important news currently. On Friday, the PCE will release data on inflation of the consumer basket of goods

EUR/USD

The euro has been consolidating under the level of 1.1200 for the fourth day today, and is not declining much. This suggests a likely new attempt to pass above 1.1200.

Keep buying from 1.1035, and stop at 1.1035.

It is possible to buy at a breakthrough of 1.1200 up.

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Hot forecast for GBP/USD on 12/19/2019 and trading recommendation

The pound continued to lose ground although inflation data in the UK turned out to be better than expected, which remained unchanged instead of falling. At the same time, no macroeconomic data was published in the United States. In part, the weakening of the pound is due to the fact that market participants continue to express their indignation over Boris Johnson's intentions to pass a law prohibiting the possibility of extending the transition period, which will begin immediately after January 31. Another factor was the weakening of the single European currency, which began to decline after Donald Trump signed the Pentagon budget for next year, which includes measures to counteract the construction of the Nord Stream 2. After all, Germany is the main beneficiary of this project, whose business will receive huge benefits, as soon as the gas pipeline is fully operational. Therefore, a sharp decline in the single European currency pulled a pound.

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Today, it is worth paying close attention to the UK again, but not because of the upcoming meeting of the Bank of England board. Moreover, Mark Carney has long explained to everyone that there will be no change in monetary policy before Brexit. Given the new ingenious initiatives of Boris Johnson, and the consequences that may follow, the Bank of England may well extend this decision until the final withdrawal from the European Union. That is, until the end of the transition period. Thus, the monetary policy of the Bank of England will remain unchanged even more than a year. Thus, the market will not react in any way to the outcome of today's board meeting.

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However, it is worth paying attention to retail sales. The growth rate of which may slow down from 3.1% to 2.1%. Such a significant decrease in consumer activity will offset the fact that inflation is stable and will have a negative effect on the pound.

Retail Sales (UK):

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At the same time, American statistics are expected to be pretty good, which will put even more pressure on the pound. In particular, the number of initial applications for unemployment benefits may decrease by 33 thousand. The number of repeated applications for unemployment benefits is likely to increase by 18 thousand. In general, the total number of applications for unemployment benefits should be reduced by 15 thousand. In addition to this, the volume of home sales in the secondary market should show an increase of 0.8%, which is also a positive factor.

Secondary Home Sales (United States):

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In terms of technical analysis, we see that the pair GBP / USD was not particularly active in the past day, but still the downward interest is still preserved. In fact, we see a control rapprochement with the psychological level of 1.3000, from which the pressure expressed in the variable of consolidation is reflected.

Considering the trading chart in general terms, we see that the quote managed to fully work out the upward impulse move that was formed last week.

It is likely to assume that the pressure from the psychological level of 1.3000 will still remain in the market, which may be reflected in the variable chatter along the level. At the same time, it is worthwhile to carefully analyze the price fixing points below the control level [1.3000], since in this case new prospects will open.

Concretizing all of the above into trading signals:

- Long positions are considered in case of price fixing at higher than 1.3100.

- Short positions are considered in case of price fixing at lower than 1.3050, with the first point 1.3001.

From the point of view of a comprehensive indicator analysis, we see that indicators relative to all time sections are considering a further decline. It is also worth considering that minute intervals can give a variable signal due to consolidation.

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Overview of the GBP/USD pair on December 19. The focus of the market is the meeting of the Bank of England. The regulator

4-hour timeframe

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Technical data:

The upper channel of linear regression: direction - up.

The lower channel of linear regression: direction - up.

The moving average (20; smoothed) - down.

CCI: -98.8376

The British pound continues a completely recoilless downward movement, although yesterday the movement slowed and weakened slightly. However, there is still no upward correction, the pair has fixed below the moving average line, so the trend has already changed to a downward one. This is also signaled by the Ichimoku indicator trading system. At the moment, the quotes of the pound/dollar pair rested on the Murray level of "2/8" - 1.3062. Approximately the same level is the line Senkou Span B of the Ichimoku indicator. Therefore, overcoming this level by bears will allow the British currency to continue falling, which is fully justified from fundamental analysis. Indeed, what can the British pound rely on, which continuously (almost) grew for two months while the British macroeconomic statistics failed from time to time, and the British Central Bank at the last meeting made an impressive step towards easing monetary policy (two of the nine members of the Monetary Committee voted to reduce the key rate)?

Although the Bank of England is preparing to reduce the key rate, we believe that this will happen a little later. Surprises are certainly possible. For example, if the Bank of England will lower its key interest rate tomorrow, the pound might collapse down. However, do not forget that on the horizon now, instead of elections to parliament, are looming Brexit, "transition period" and complex negotiations between Boris Johnson and the group from the EU, led by Michel Barnier. Johnson, who is completely unafraid of a "hard" Brexit, will continue to put pressure on the EU. Like, if the Europeans are not going to conclude a "quick agreement", which will suit the UK, then London can get out of the jurisdiction of Brussels and without any agreements. That was Johnson's mindset from the start. It was against it that the Laborites, the Scottish nationalists and virtually every other political force in the UK fought. However, the elections showed that the population is eager to leave the EU quickly and are ready to follow Boris Johnson and his decisions. Thus, the Bank of England, most likely, will not rush to lower the key rate, realizing that in the future the Prime Minister can receive several "unpleasant surprises", and he will not be able to stop his activities with the help of the opposition or through the Supreme Court. Thus, the regulator is likely to leave such a step as a rate cut as a last resort. It is expected that members of the monetary committee Michael Saunders and Jonathan Haskell will continue to vote in favor of lowering the rate, but it is unlikely that someone else will support them now. Thus, with the maximum "dovish" mood of the Committee, the balance of votes will turn out to be 0-3-6. However, in the future, we believe that such a step by the British regulator as a reduction in the key rate is almost inevitable.

In addition to the meeting of the Bank of England, traders tomorrow will see the publication of data on retail sales in the UK for November. Experts' forecasts suggest that the growth will be about 2.1% in annual terms and 0.3% - every month. Thus, the slowdown in retail sales is expected to continue, which can be interpreted as another deterioration in the economic situation in Albion. Thus, potentially, the pound tomorrow may continue to be under pressure from market participants, like all factors, at first glance, speak against it. If we add another technical factor, which implies a strong fall in the British currency, at least as part of the correction against the two-month growth, the fall of the pound tomorrow becomes almost inevitable.

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The average volatility of the pound/dollar pair over the past 5 days is 189 points, but even for the pound, it is unnatural to pass more than 200 points per day. Therefore, 3 of the last 5 trading days can be considered abnormal in terms of volatility. Thus, we took the indicators of average volatility for 30 days and according to them, the working volatility channel on December 19 is limited to the levels of 1.2988 and 1.3170. The meeting of the Bank of England is a very important event, but the regulator is not likely to make any particularly important decisions. This means that volatility is unlikely to be more than 100-120 points.

Nearest support levels:

S1 - 1.3062

S2 - 1.3000

S3 - 1.2939

Nearest resistance levels:

R1 - 1.3123

R2 - 1.3184

R3 - 1.3245

Trading recommendations:

The GBP/USD pair continues its downward movement. Thus, traders are advised to remain in the sales of the British currency with the nearest targets of 1.3062 and 1.3000 until the Heiken Ashi indicator turns upwards, which signals the beginning of a correction. It is recommended to return to the purchases of the pound/dollar pair not earlier than the reverse consolidation above the moving average line with the targets of 1.3245 and 1.3306.

In addition to the technical picture, fundamental data and the time of their release should also be taken into account.

Explanation of the illustrations:

The upper channel of linear regression - the blue line of the unidirectional movement.

The lower channel of linear regression - the purple line of the unidirectional movement.

CCI - the blue line in the regression window of the indicator.

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

Support and resistance - the red horizontal lines.

Heiken Ashi - an indicator that colors bars in blue or purple.

Possible variants of the price movement:

Red and green arrows.

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Technical analysis: Important intraday Level For EUR/USD, December 19,2019

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Belgian NBB Business Climate from the eurozone is due today. The US will unveil such economic data as Natural Gas Storage, Existing Home Sales, CB Leading Index m/m, Unemployment Claims, Current Account, and Philly Fed Manufacturing Index.So, amid the reports, EUR/USD will move in a low to medium volatility during this day.TODAY'S TECHNICAL LEVEL: Breakout BUY Level: 1.1170. Strong Resistance: 1.1164. Original Resistance: 1.1153. Inner Sell Area: 1.1142.Target Inner Area: 1.1116. Inner Buy Area: 1.1090. Original Support: 1.1079. Strong Support: 1.1068. Breakout SELL Level: 1.1062. (Disclaimer)

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Technical analysis: Important Intraday Levels for USD/JPY, December 19, 2019

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In Asia, Japan will release the BOJ Policy Rate and Monetary Policy Statement. The US will also publish some economic data such as Natural Gas Storage, Existing Home Sales, CB Leading Index m/m, Unemployment Claims, Current Account, and Philly Fed Manufacturing Index. 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: 110.16. Resistance. 2: 109.94. Resistance. 1: 109.70. Support. 1: 109.47. Support. 2: 109.26. Support. 3: 109.04. (Disclaimer)The material has been provided by InstaForex Company - www.instaforex.com

Overview of the EUR/USD pair on December 19. The meeting of the US Congress has begun, at which a vote will be held on Trump's

4-hour timeframe

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Technical data:

The upper channel of linear regression: direction - up.

The lower channel of linear regression: direction - up.

The moving average (20; smoothed) - sideways.

CCI: -128.6496

On Thursday, December 19, the EUR/USD currency pair starts by breaking the moving average line. Thus, two trading systems ("Ichimoku" and "linear regression channels") have signals to change the trend to a downward one. As you can see, the euro/dollar pair did not manage to overcome the Murray level of "6/8" - 1.1169, from which the rebound was performed twice, and before that, from October 21 to November 4, another 3 times. Thus, this level (or the area around this level) is a strong resistance zone, which the bulls could not overcome. If the fundamental background spoke in favor of the European currency, then it would be possible to count on overcoming the specified resistance area, but the fundamental background leaves much to be desired for the euro currency. The short-term fundamental background will be extremely weak today. In the European Union, no important macroeconomic publication is scheduled for Thursday, in the States - only data on applications for unemployment benefits will be published, which are unlikely to cause at least some reaction among traders. All the attention of traders, thus, will be shifted towards the meeting of the Bank of England and the vote of the House of Representatives of the US Congress for the impeachment of Donald Trump.

The topic of the meeting of the British Regulator will be discussed in detail in the article on GBP/USD. And in this article, we will look at the topic with the vote of the US Congress. The latest information says the following. Last week, the Congressional Judiciary Committee approved two articles under which Trump could be impeached. The US President is accused of abuse of office and obstruction of the US Congress. Today, the House of Representatives began the next meeting, at which the vote will take place. The session of Congress began with a speech by Speaker Nancy Pelosi, who said: "It is a fact that President Trump is a constant threat to our national security, the integrity of our elections and the foundations of our democracy." The Speaker of Congress considers it a reliable fact that Donald Trump violated the US Constitution. According to Pelosi, Donald Trump simply left no other options but to start the impeachment procedure to Congress. However, several representatives of the Republican Party have already spoken out. For example, Debbie Lesko, representing Arizona, called the process "the most cheating she's ever seen." "No Democrat has ever given evidence that the President committed crimes that could cause impeachment," the Republican said. Indiana Republican Jackie Walorski said that "this is a shameful impeachment that is being done at the expense of Americans who want the country to move forward." And Republican Steve Scalise said that unlike the impeachment proceedings that began against Richard Nixon and Bill Clinton, the process against Trump began "without a crime." Paradoxically, Donald Trump's political ratings have risen over the past few months. Now, 43% of Americans support the activities of the US President, and 52% do not support him. But even with the rise in political popularity, 43% is not enough to seriously expect to win the 2020 presidential election.

The end of the Congressional vote can be predicted with a 90% probability. By and large, this whole topic leaves only one important question: will it affect the opinion of voters in November 2020? After all, there is no denying that Trump's official accusations of treason can make some fans of the odious president change their minds. Anyway, this topic is interesting, although it does not yet have much impact on the movement of the euro/dollar currency pair. Given the general fundamental background and the technical picture, we expect the US currency to continue strengthening. Both channels of linear regression are still directed upwards, so US dollar purchases are recommended in small lots.

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The average volatility of the euro/dollar currency pair has decreased due to the last three trading days and is now about 54 points per day, which is the average. The average volatility for the last 30 days remains unchanged - 43 points. Thus, the channel in which the pair can move on December 19 is limited to the levels of 1.1062 and 1.1169. We still believe the upward trend is complete. Tomorrow's fundamental background will be almost zero, so the volatility may be about 30-40 points.

Nearest support levels:

S1 - 1.1108

S2 - 1.1078

S3 - 1.1078

Nearest resistance levels:

R1 - 1.1139

R2 - 1.1169

R3 - 1.1200

Trading recommendations:

The euro/dollar pair continues to move down, the upward trend is canceled. Thus, it is now recommended to consider the sale of the euro currency with the targets of 1.1108 and 1.1078, which can be opened in small lots. The overall fundamental background is not on the side of the euro, so the pair's fall is more preferable. It is recommended to buy the euro again not earlier than the return of quotes to the area above the moving average with a target of 1.1169.

In addition to the technical picture, fundamental data and the time of their release should also be taken into account.

Explanation of the illustrations:

The upper channel of linear regression - the blue line of the unidirectional movement.

The lower channel of linear regression - the purple line of the unidirectional movement.

CCI - the blue line in the indicator window.

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

Support and resistance - the red horizontal lines.

Heiken Ashi - an indicator that colors bars in blue or purple.

Possible variants of the price movement:

Red and green arrows.

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

GBP/USD: plan for the European session on December 19. The direction of the pound depends on the results of the vote within

To open long positions on GBPUSD, you need:

The pound remains in the side channel, preparing to make another jump down, but everything will depend on how many members of the committee will vote to lower the interest rate at this meeting. If the Bank of England does not change its policy course, it will lead to the strengthening of the pound, and the return to the resistance level of 1.3134 will be a signal to open long positions in the hope of updating the highs of 1.3202 and 1.3258, where I recommend taking the profits. If the pressure on GBP/USD persists after the regulator's decision, it is best to consider new long positions only after a false breakout in the area of 1.3065, or a rebound from the lows of 1.3010 and 1.2952.

To open short positions on GBPUSD, you need:

Sellers will wait for the results of the vote, and if more than two members of the committee vote in favor of reducing the interest rate, the Bank of England rate may change significantly, which will hit the positions of GBP/USD and lead to a breakthrough of the support of 1.3065, below which many stop orders of buyers of the pound are collected. Fixing below the level of 1.3065 will be a sell signal, which will lead the pair to update the supports of 1.3010 and 1.2952, where I recommend taking the profits. If the Bank of England refrains from changes in monetary policy, a breakthrough of 1.3134 will provide growth to the pound. In this scenario, it is best to consider new short positions after updating the highs of 1.3203 and 1.3258.

Indicator signals:

Moving Averages

Trading is conducted in the area of 30 and 50 moving averages, which indicates a possible end of the downward trend.

Bollinger Bands

Volatility has decreased, which does not give signals to enter the market.

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Description of indicators

  • Moving average (moving average determines the current trend by smoothing volatility and noise). Period 50. The chart is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing volatility and noise). Period 30. The chart is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence - Convergence / Divergence of moving averages) - 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

EUR/USD: plan for the European session on December 19. The pressure on the euro may continue if the return to the level of

To open long positions on EURUSD, you need:

The absence of important fundamental statistics leaves the euro in a narrow channel with low intraday volatility. Yesterday, the bulls retreated from the middle of the channel at 1.1127, which led to a breakout of this range and the formation of resistance at 1.1132. Today, the key task will be to return to this range, but in the first half of the day, in the absence of important fundamental statistics, it is unlikely to talk about a larger growth of EUR/USD in the area of the upper border of the side channel 1.1172. In case of unsuccessful consolidation above 1.1132, I recommend to postpone long positions until the minimum of 1.1090 is updated, and in the case of the larger drop in the euro, after data on the US economy, it is best to consider new purchases for a rebound from the area of 1.1041.

To open short positions on EURUSD, you need:

Sellers, showing minimal activity, managed to drag the euro at the level of 1.127 yesterday, which is now transformed into resistance 1.1132. It is this range that bears will protect today in the first half of the day, and the formation of a false breakout on it will be a signal to open short positions to reduce to the area of the lows of 1.1090 and 1.1041, where I recommend taking the profits. The absence of important fundamental statistics on the eurozone today in the first half of the day is unlikely to lead to sharp market jumps. If the pair grows in the first half of the day above the resistance of 1.1132, I recommend selling EUR/USD only on a rebound from the maximum of 1.1172, or after updating the monthly resistance around 1.1198.

Indicator signals:

Moving Averages

Trading is conducted in the area of 30 and 50 moving averages, which indicates the lateral nature of the market.

Bollinger Bands

Breaking the upper limit of the indicator around 1.1132 will lead to the growth of the European currency. The breakdown of the lower border, which coincides with the support of 1.1105, will increase the pressure on the euro.

analytics5dfaf2245ed7f.png

Description of indicators

  • Moving average (moving average determines the current trend by smoothing volatility and noise). Period 50. The chart is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing volatility and noise). Period 30. The chart is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence - Convergence / Divergence of moving averages) - 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

Forecast for USD/JPY on December 19, 2019

USD / JPY

On the daily chart of the USD / JPY pair, the price continues to consolidate with upward pressure. Also, the signal line of the Marlin oscillator rises with difficulty, remaining under its own resistance of the two previous peaks marked by arrows on the indicator chart. The immediate target of growth will be the green nested line of the upward price channel at 110.00. From this goal, there may be a price reversal downwards, in this case, the divergence according to Marlin will take on a more complex extended form, it is marked with an azure dotted line. Overcoming resistance will open the second target 110.40. Here, the resistance is the upper limit of the red downward price channel, originating from August 2015, which could become an even stronger reversal factor.

analytics5dfae56329203.png

A triangle forms on the four-hour chart and this is a sign of another upward movement. The price, on the other hand, is above the indicator lines, while the Marlin signal line moves exactly along the border of trends which is rising and falling in a neutral position.

So, we are waiting for another upward price movement before it turns down.

analytics5dfae57ad7600.png

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Forecast for EUR/USD on December 19, 2019

EUR / USD

The euro found support from the balance line on the daily chart, which is down 37 points during yesterday's decline. On the other hand, oscillator divergence Marlin is gaining strength. Price strives for its first target, 1.1060, to the nested line of the downward blue price channel. Now, breaking through support opens consistent downward goals: 1.1025 - on the MACD line, 1.0985 - Fibonacci level of 128.2% and other more "bearish" goals.

analytics5dfae737c8c2b.png

On the four-hour chart, the price has gone below both indicator lines - the balance line (red) and the MACD line (blue). Meanwhile, the Marlin Oscillator in the zone of negative numbers is in a downward trend.

analytics5dfae76dcb20f.png

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

Forecast for GBP/USD on December 19, 2019

GBP / USD

On Wednesday, the British pound continued to decline, but its speed decreased as it approaches the technical support - to the red balance line on the daily chart and the slowdown in the decline of the signal line of the Marlin oscillator on the boundary with the territory of the "bears". However, the oscillator has already negative values. Therefore, the first target 1.2965 can be reached soon. The support is strong in October and November, and it was the resistance to consolidation. Due to this, an upward correction is likely from it.

analytics5dfae66b2706d.png

The subsequent breaking through of this support in the main scenario opens the target 1.2730 - the Fibonacci reaction level is 123.6%. Next, we expect the price at the Fibonacci level of 100.0% (maximum of September 20) at the price of 1.2582.

analytics5dfae684bbaa2.png

On a smaller (four-hourt) chart, the price is developing under both indicator lines - the balance line (red) and the MACD line (blue). Meanwhile, the Marlin indicator is in a downward position.

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

Fractal analysis of the main currency pairs for December 19

Forecast for December 19:

Analytical review of currency pairs on the scale of H1:

analytics5dfac5bf50435.png

For the euro / dollar pair, the key levels on the H1 scale are: 1.1261, 1.1239, 1.1198, 1.1156, 1.1134, 1.1103, 1.1078 and 1.1046. Here, the price is in the correction zone from the ascending structure on November 29. Meanwhile, consolidated movement is expected in the range of 1.1134 - 1.1156. The breakdown of the latter value will lead to movement to the level of 1.1198. Price consolidation is near this level. The breakdown of the level of 1.1200 will allow you to count on movement towards a potential target - 1.1261, upon reaching this level, we expect consolidation in the range of 1.1261 - 1.1239.

Short-term downward movement is expected in the range 1.1103 - 1.1078. The breakdown of the latter value will have the downward structure development on December 13. In this case, the potential target is 1.1046.

The main trend is the upward structure of November 29, the correction stage

Trading recommendations:

Buy: 1.1134 Take profit: 1.1154

Buy: 1.1158 Take profit: 1.1196

Sell: 1.1103 Take profit: 1.1080

Sell: 1.1076 Take profit: 1.1046

analytics5dfac5dd72348.png

For the pound / dollar pair, the key levels on the H1 scale are: 1.3264, 1.3193, 1.3146, 1.3035, 1.2988 and 1.2901. Here, we are following the development of the downward cycle of December 13. Short-term downward movement is expected in the range 1.3035 - 1.2988. The breakdown of the latter value will allow us to count on movement to a potential target - 1.2901, when this level is reached, we expect a pullback to the top.

Short-term upward movement is possibly in the range of 1.3146 - 1.3193. The breakdown of the last value will lead to a long correction. Here, the target is 1.3264. This level is a key support for the downward structure.

The main trend is the descending cycle of December 13

Trading recommendations:

Buy: 1.3146 Take profit: 1.3190

Buy: 1.3195 Take profit: 1.3264

Sell: 1.3035 Take profit: 1.2990

Sell: 1.2986 Take profit: 1.2903

analytics5dfac5f835a54.png

For the dollar / franc pair, the key levels on the H1 scale are: 0.9915, 0.9870, 0.9845, 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 0.9789. 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 0.9845 - 0.9870. The breakdown of the latter value will lead to in-depth movement. Here, the target is 0.9915. This level is the key support for the downward structure of November 29.

The main trend is the downward structure of November 29

Trading recommendations:

Buy : 0.9845 Take profit: 0.9870

Buy : 0.9872 Take profit: 0.9913

Sell: 0.9786 Take profit: 0.9745

Sell: Take profit:

analytics5dfac615b2597.png

For the dollar / yen pair, the key levels on the scale are : 110.52, 110.20, 109.96, 109.62, 109.23, 109.08 and 108.85. Here, we are following the formation of the initial conditions for the top of December 12. The continuation of the movement to the top is expected after the breakdown of the level of 109.62. In this case, the target is 109.96. We expect a short-term upward movement, as well as consolidation in the range of 109.96 - 110.20. For the potential value for the top, we consider the level of 110.52. Upon reaching which, we expect a rollback to the correction.

Short-term downward movement is expected in the range 109.23 - 109.08. The breakdown of the latter value will lead to an in-depth correction. Here, the target is 108.85. This level is the key support for the upward structure from December 12.

Main trend: initial conditions for the top of December 12

Trading recommendations:

Buy: 109.63 Take profit: 109.96

Buy : 109.98 Take profit: 110.20

Sell: 109.23 Take profit: 109.08

Sell: 109.06 Take profit: 108.85

analytics5dfac638849b2.png

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, 1.3094 and 1.3034. Here, we continue to monitor the long-term descending structure of 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 in the range of 1.3118 - 1.3094. For the potential value for the bottom, we consider the level of 1.3034. Upon reaching which, we expect a pullback to the top.

A correction can be possibly made after the breakdown of the level of 1.3160. Here, the target is 1.3196. The range of 1.3196 - 1.3217 is the key support for the downward structure. Its passage at the price will be conducive to the development of the upward movement. Here, the potential goal is 1.3256.

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

Trading recommendations:

Buy: 1.3160 Take profit: 1.3196

Buy : 1.3218 Take profit: 1.3252

Sell: Take profit:

Sell: 1.3092 Take profit: 1.3040

analytics5dfac6562aaa0.png

For the Australian dollar / US dollar pair, the key levels on the H1 scale are : 0.6957, 0.6932, 0.6900, 0.6879, 0.6863, 0.6832, 0.6808, 0.6791 and 0.6765. Here, the price is in an equilibrium situation: the ascending structure of December 10 and the descending of December 13. The continuation of the movement to the bottom is expected after the breakdown of the level of 0.6832. In this case, the target is 0.6808. Short-term downward movement, as well as consolidation is in the range of 0.6808 - 0.6791. For the potential value for the bottom, we consider the level of 0.6765. Upon reaching which, we expect a pullback to the top.

Short-term downward movement is expected in the range of 0.6863 - 0.6879. The breakdown of the last value will lead to an in-depth correction. Here, the target is 0.6900. This level is a key support for the downward structure. Its breakdown will lead to a pronounced movement. Here, the first goal is 0.6932.

The main trend is the equilibrium situation.

Trading recommendations:

Buy: 0.6863 Take profit: 0.6876

Buy: 0.6880 Take profit: 0.6900

Sell : 0.6832 Take profit : 0.6808

Sell: 0.6807 Take profit: 0.6793

analytics5dfac67d8381b.png

For the euro / yen pair, the key levels on the H1 scale are: 122.87, 122.39, 122.04, 121.80, 121.38, 121.00 and 120.52. Here, the price is in correction from the rising structure on December 9 and forms the potential for the bottom of December 13. The continuation of the movement to the bottom is possibly after the breakdown of the level of 121.38. Here, the first goal is 121.00. Price consolidation is near this level. The breakdown of the level of 121.00 will lead to a pronounced downward movement. Here, the potential target is 120.52.

Consolidated movement is possibly in the range of 121.80 - 122.04. The breakdown of the last value will have the subsequent development of an upward trend, where the first goal is 122.39. This level is the key resistance for the top.

The main trend is the upward structure of December 9, the correction stage

Trading recommendations:

Buy: 122.41 Take profit: 122.85

Buy: Take profit:

Sell: 121.38 Take profit: 121.05

Sell: 121.00 Take profit: 120.60

analytics5dfac69dc494d.png

For the pound / yen pair, the key levels on the H1 scale are : 145.45, 144.52, 143.90, 142.86, 141.96, 141.40 and 140.31. Here, we are following the development of the downward cycle of December 13. The continuation of the movement to the bottom is expected after the breakdown of the level of 142.86. In this case, the goal is 141.96. Short-term downward movement, as well as consolidation is in the range of 141.96 - 141.40. For the potential value for the bottom, we consider the level of 140.31. Upon reaching this level, we expect a pullback to the top.

Short-term upward movement is possibly in the range of 143.90 - 144.52. The breakdown of the latter value will lead to an in-depth correction. Here, the goal is 145.45. This level is a key support for the descending cycle of December 13.

The main trend is the descending cycle of December 13

Trading recommendations:

Buy: 143.90 Take profit: 144.50

Buy: 144.60 Take profit: 145.40

Sell: 142.84 Take profit: 142.00

Sell: 141.40 Take profit: 140.35

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

GBP/USD. December 18. Results of the day. Boris Johnson is ready to return to the "tough" Brexit and takes a tough position

4 hour time-frame

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Amplitude of the last 5 days (high-low): 108p - 179p - 354p - 101p - 234p.

Average volatility over the past 5 days: 196p (high).

On Wednesday, the GBP/USD currency pair continued trading in a steady downward movement, which, from our point of view, is justified by only one factor. This factor is elections to the Parliament of Great Britain. They were left behind and deprived market participants of the foundation and the reason that allowed them to buy the pound in the last two months. Now that it is clear that the entire power in the country is concentrated in the hands of the Conservative Party, that neither Labor, nor Scottish nationalists, nor, other political forces, and even all of them combined, can prevent Boris Johnson from doing so, gives an opportunity with high accuracy to predict what will happen in the state in the near future. There will be a vote on a bill of agreement between Britain and the European Union December 20 and it will certainly be adopted by a majority vote and on January 31, 2020 (or even earlier), the so-called "transition period" will begin, during which the Boris Johnson government will need to agree with Brussels on all aspects of the further coexistence of the Alliance and the Kingdom, which has left the jurisdiction of Brussels. However, he absolutely does not have to do it now if Boris Johnson and his cabinet had to agree earlier, because Parliament required it. It can be recalled that Johnson was initially ready to implement the "hard" Brexit without any agreements with the European Union. Now that there are already agreements, it is possible to continue the negotiations with Michel Barnier and the company, but the British Prime Minister has already made it clear that he will not make any concessions, prolongation of the "transitional period" categorically rejects (now there is a law in the UK that allows extending the "transitional period" once for a period of 2 years, if the parties fail to manage to reach an agreement before the expiration of the initial period). According to Johnson, any negotiations with the EU should be completed by December 31, 2020, and if London and Brussels fail to meet this deadline, then the gap will occur without an agreement at all. That is, in fact, the government of Boris Johnson, having received full power in the country, is absolutely not opposed to returning to the original version with the "hard" Brexit, or is this a new plan by Boris Johnson aimed at political blackmail of the leaders of the European Union? Approximately Johnson's strategy may be as follows. The Prime Minister threatens a "tough" divorce and requires speedy negotiations and the speedy conclusion of a trade agreement. If the EU drags out the time during which Britain continues to pay contributions to the European treasury, to remain under all EU financial standards, then Johnson is ready to withdraw without a "deal". Since the "tough" Brexit is not beneficial for the EU itself, then, according to the Prime Minister, the Europeans will be much more accommodating. In any case, negotiations will continue for at least the next year, which will be difficult according to the vast majority of experts In addition, a trade agreement will be best concluded at the end of the year that will mitigate the negative effect of breaking all ties between London and Brussels. In the worst case, there will be no agreement, and a blow will be dealt to both the UK economy and the EU economy.

On the other hand, macroeconomic statistics from the UK continues to leave much to be desired, however, today, the only British report of the day - the consumer price index for November - did not disappoint market participants when the pound continued to calmly drop in price. According to experts, inflation in the Foggy Albion should have been reduced to 1.4% y / y, but this did not happen and the index remained at the level of the previous month - 1.5% y / y. This is not to say that this is great and now the British economy will begin to recover. This is just the absence of deterioration in one month. If we recall the rest of the macroeconomic statistics, it becomes clear that there are no reasons for joy and the British pound is likely to continue to fall against the US currency. Moreover, the most important topics for the US dollar (the impeachment of Donald Trump, trade wars and negotiations with China) have no effect on the movement of the GBP / USD pair. On the other hand, macroeconomic statistics from across the ocean, turns out to be quite strong and does not disappoint in most cases, that is if it does not please traders in 100% of cases. Therefore, it turns out that the prospects for the British currency are now approximately the same as those of the European currency - which is absolutely negative. Nevertheless, we can hypothetically hardly imagine what should happen in the States or the European Union, so that the balance of power between their economies is reversed, and then the majority comes out strong enough and does not disappoint.

Trading recommendations:

GBP/USD continues to form a new downward trend. The price has developed the bottom line of the Ichimoku cloud and the first support level of 1.3083. Thus, a rebound from these strong support levels may trigger a round of upward correction. However, without rebounding the price from the indicated supports or without turning up the MACD indicator, it is not recommended to reduce sell positions. The following targets for trading are lowering 1.2931 and 1.2833. It is recommended that purchases of the British pound be returned no earlier than the price fixing above the Kijun-sen line, which is clearly not expected in the coming days.

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 indicators 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 18. Results of the day. EU inflation holds 1%, but its prospects are not bright

4 hour time-frame

analytics5dfacfe16051d.png

Amplitude of the last 5 days (high-low): 75p - 51p - 93p - 35p - 46p.

Average volatility over the past 5 days: 60p (average).

On Wednesday, December 18, the EUR/USD currency pair continued its downward corrective movement, broken through the Kijun-sen critical line and came close to the volatility level of 1.1106, which we call the minimum price level for today. At the same time, the price continues to be located above the Ichimoku cloud, but the Tenkan-sen and Kijun-sen lines crossed, which means the formation of a new "dead cross" sell signal. Based on this, we received the first signs of the emergence of a new downward trend, which is still fully justified from a fundamental point of view - both short-term and long-term. During the third trading day of the week in Germany, a producer price index was published, which predicts the future level of inflation. After all, if, for example, producer prices fall or their growth rates decline, then roughly the same can be expected from inflation in the country. So producer prices in monthly terms showed a zero increase in November, and they decline by 0.7% compared to November last year. Thus, we consider this index value a harbinger of sheer disaster. On the other hand, inflation in Germany may continue to slow down, although a recent report showed no change and a value of + 1.1% y / y. However, a reduction in producer prices can only mean a further slowdown in general inflation in Germany. If we recall that inflation in Italy is approaching a zero value in annual terms, then it becomes scary for pan-European inflation, and the probability of lowering the key rates of the ECB increases many times.

Today, inflation was published in the European Union, which has not yet had time to react to a slowdown in inflation in individual countries of the eurozone and a negative producer price index in Germany. According to the statistics office, the consumer price index amounted to 1.0% y / y in November, which fully coincides with the forecast values. In monthly terms, a 0.3% decline in prices followed. We expected that inflation would not keep the level of 1.0%, which, in principle, is already quite low and far from the inflation target set by the ECB (2.0% y / y). The more likely it is that next month, the slowdown in inflation in the European Union will resume. In addition, eurocurrency showed a moderate decline today and we believe that the decline will continue in almost any case. We have repeatedly written about the sharply negative fundamental background for the Euro currency, Now, trend indicators are starting to unfold in favor of the US dollar. If traders manage to overcome the Ichimoku cloud, the probability of a new downward trend will increase significantly.

Well, the bulls can only wait for negative news from the United States, hoping that they will be very bad so that economic data from the European Union look more "worthy" against their background. However, we do not expect a sharp deterioration in macroeconomic statistics in the United States in the near future. Although it is likely that it will continue to deteriorate in the EU. At the same time, rumors have been circulating for several months now that the measures taken by the ECB under the leadership of Mario Draghi at its penultimate meeting are clearly not enough to support the European economy. Perhaps, some positive changes will follow a little later, after all, China and the States have agreed on the "first phase" of the trade agreement, but we believe that this will not help the European currency and the Alliance economy too much. Thus, we quite reasonably expect further easing of the ECB's monetary policy, which is already ultra-soft. Christine Lagarde and the company simply have no choice.

Meanwhile, traders can make sure that there are a lot of "sharp corners" in relations between China and the United States once again. Today, Foreign Ministry spokesman Geng Shuang said that Washington's desire to limit the export of high technology to the PRC could negatively affect cooperation between American and Chinese companies. "China strongly opposes the US abusing the concept of national security and export controls. This interferes with normal cooperation between enterprises and countries." said Geng Shuang. In addition, Shuang could not do without causticism at the White House. "The United States is too arrogant." said Shuang. "They mistakenly believe that restricting the export of high technology to China will stop the scientific and technological development of our country." Chinese diplomat "hopes that the United States will do more to build mutual trust and win-win cooperation." According to the latest information, Donald Trump's administration is working on a list of rules that will be aimed at restricting access to high technology for a number of countries that are "rivals" to the United States.

Trading recommendations:

EUR/USD seems to have started a downward trend. Thus, short positions with goals 1.1106 and 1.1049 are relevant now. The first target can be fulfilled today, as expected in the morning. At the same time, breaking through the Ichimoku cloud will strengthen the "dead cross", and also lead to a turn of the Bollinger Bands down. Thus, it is recommended to buy a pair of euro / dollar not earlier than the price fixing above the Kijun-sen line with the first target resistance level of 1.1196.

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 indicators 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: Will the further direction for the euro be slippery or smooth, should we wait for a rapid increase or a hard decline?

analytics5dfa2e729010f.jpg

While some analysts believe that it is too early to write-off the dollar, others believe that the long-term prospects for a single European currency look more preferable.

"If I were offered to choose any asset, then it would still be a dollar. It is highly probable that it will show good dynamics at the beginning of 2020, and then the EUR/USD pair will decrease to the area of 1.08 by summer. After that, the American currency is likely to decline in price, but not as much as most investors think." said Jane Foley, head of the Rabobank currency strategy department.

The euro will be worth $ 1.13 against the dollar by mid-2020, according to a consensus forecast by experts recently surveyed by Bloomberg.

On the other hand, the EUR/USD pair will reach this level only by the end of next year after the Fed softens the monetary policy again, according to J. Foley.

In turn, Westpac experts have a similar view. They expect the dollar to cheerfully start the year, and then give up a few positions.

Over the next three months, the EUR/USD pair should remain in the range of 1.10–1.12, according to BMO Capital Markets.

"Our official forecast assumes that the ECB policy remains unchanged in the first half of 2020, although we see that the balance of risks is shifted towards additional easing of the regulator's monetary rate," BMO representatives said.

"The euro is likely to fall to $ 1.08 in the next six months amid new stimulus measures by the ECB. The EU's political agenda and trade-related factors will also be of great importance for the euro." they added.

Trade relations between Europe and the United States remain tense. Officials on both sides of the Atlantic say the importance of a trade. Meanwhile, positive news from the trade front will support the euro, while criticism of EU trade practice by US President Donald Trump will damage the single European currency.

The most "bearish" forecast for the euro is given by Barclays analysts. They expect the dollar to strengthen against the single European currency by the end of 2020, and as a result of which, the EUR/USD pair will reach 1.07.

However, there are those who bet on a rather sharp decline in the dollar next year. According to the forecast of UBS, the main currency pair will complete 2020 near the level of 1.19. At the same time, Deutsche Bank and Societe Generale expect the euro to soar to $ 1.20 by the end of next year.

Meanwhile, Bank of America and Goldman Sachs forecast growth to $ 1.15, BNP Paribas, Citigroup, and JP Morgan - to $ 1.14.

The main arguments are called the restoration of the eurozone economy and a decrease in the growth rate of US GDP to the level of stall. Thus, it is expected that the theme of the onset of the recession in the United States will return to the markets next year, which will put pressure on the dollar.

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

EUR/USD and GBP/USD: Euro will not be able to ignore weak inflation in the eurozone for a long time, while the Bank of England

The euro ignored data on improving sentiment in German business circles in December this year, as weak inflation, which fell in November in the eurozone, confirms the need for new measures to stimulate the economy by the European Central Bank once again. It has already been repeatedly noted that the European regulator can go on a reduction in the deposit rate already in the early spring of next year, and reports coming out at the end of this year only confirms this forecast.

analytics5dfac68fc16c3.png

According to Ifo, the German business sentiment index rose to 96.3 points in December 2019 from 95.1 points in November, while economists predicted the index rose to 95.5 points. The current conditions index reached 98.8 points, while the expectations index rose to 93.8 points. Economists had expected the index of conditions to rise to 98 points, and the index of expectations to 93.0. Ifo noted that the German economy could enter the new year more confidently, but problems remain in the manufacturing sector, even though companies' expectations regarding prospects have become less pessimistic. It is important to note that the service sector continues to stay away from the manufacturing sector, in every possible way ignoring its problems, fueled mainly by domestic demand.

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As for inflation in the eurozone, it is not as pleasing as we would like. According to the report, CPI in the eurozone in November this year declined by 0.3% compared with October, fully coinciding with the forecasts of economists. Lower inflation is direct evidence of the sluggish economic growth of the eurozone throughout the year. Inflation grew by only 1.0% compared to the same period of 2018, which clearly does not reach the target value of the European Central Bank of about 2.0%. As for core inflation excluding volatile categories, the reduction was even greater, which is around 0.5% compared with October, which indicates an increase in the overall indicator, which was achieved due to energy sources. Core inflation rose by 1.3% compared to last year.

As for the technical picture of the EUR/USD pair, it remained unchanged. At the moment, the bears will strive to push the trading instrument below the support of 1.1110, which will lead to the lows of 1.1070 and 1.1040. With an upward correction, problems for euro buyers may begin in the resistance area of 1.1165. Due to this, larger players will prefer protection level 1.1200, which is a kind of psychological level. Now, its breakthrough will lead to the continuation of the upward trend of the European currency.

GBP/USD

The pound stopped falling, despite the ONS report stating that inflation in the UK was at a 3-year low in November this year.

According to data, UK consumer prices rose 0.2% in November this year after a 0.2% decline in October this year. Moreover, prices rose by 1.5% compared to November last year, which fully coincided with the forecasts of economists. The report indicated that the increase was mainly due to the price of chocolate and tickets. In turn, price reductions were observed for tobacco products. The basic consumer price index, which does not take into account volatile categories, grew by 1.7% in November compared to the same period of the previous year.

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The data, on the one hand, allow the Bank of England to adhere to the current level of interest rates, since inflation has not reached the 2% mark for four consecutive months. Thus, if the English regulator decides to raise rates, then there will also be no problems with this, since a seriously one-time increase is unlikely to slow down the current price increase. In addition, lower rates do not threaten a strong price increase.

Meanwhile, housing prices in the UK rose in October 2019, but the pace has seriously slowed down. According to the National Bureau of Statistics, the average housing price increased by 0.7%, to 233,000 pounds in October of this year, compared with the same period last year.

As for the technical picture of the GBP/USD pair, it has not changed in any way compared to the morning forecast. The breakdown of support 1.3075 will hit the stop orders of buyers, however, it is hardly worth counting on maintaining a powerful downward momentum. Apparently, the bulls are beginning to gradually return to the market, although more acceptable levels for purchases are visible in the areas of 1.3013 and 1.2952. At the same time, if there is any upward correction of the pound, it will be limited to the area of the 32nd figure.

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

GBP/USD. Bank of England may increase pressure on the pound if it changes the ratio to 0-2-7

Today, the pound paired with the dollar slowed down, but still remains under pressure, despite the very tolerable data on the growth of British inflation. In turn, traders of the pair are clearly nervous in anticipation of tomorrow, and in the framework of which, the December meeting of the Bank of England will be held.

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Recently, currency strategists increasingly admit the probability of a proactive easing of monetary policy at the beginning of next year. The decline in key economic indicators amid weak inflationary growth only reinforce concerns about this. In addition, the pound came under pressure from political factors: traders did not have time to celebrate the victory of the conservatives, as Johnson presented them with an unpleasant surprise - he expressed his intention to legislatively limit the transition period. At the same time, the market began to trade in the face of uncertainty, above all - regarding the prospects for future negotiations between London and Brussels. Thus, it is already obvious that these negotiations will be difficult, especially considering the rather tough line of behavior of the current British prime minister.

Now, let's go back to the Bank of England. Let me remind you that the Briton collapsed throughout the market following the November meeting, although the regulator left all the parameters of monetary policy unchanged. The fact is that two members of the Committee - Saunders and Haskell - unexpectedly voted to reduce the interest rate, thereby violating the expected balance of power (0-2-7 instead of the predicted 0-0-9). For the first time in three years, that is, since August 2016, Central Bank officials, albeit not in the majority, have voted in favor of easing monetary policy. Moreover, representatives of the "dovish wing" said that the regulator needs to introduce additional incentives as soon as possible, as recent releases indicate a weakening of the British labor market amid increasing risks from the global trade conflict. It can be noted that Saunders is not the first to vote contrary to the opinion of most colleagues. A little over a year ago, he, along with Ian McCafferty (who is no longer a member of the Committee), voted to raise the rate, while the remaining 7 members of the Committee voted to maintain the status quo. Now, the opposite situation has developed: the "disgraced" official insists on easing monetary policy, pointing to a slowdown in Britain's GDP growth, the labor market, as well as weak inflation.

Recent releases really leave much to be desired. The UK economy for the last study period (October) remained at zero level (on a monthly basis), while the key indicator increased by only 0.7% in annual terms - this is the weakest growth rate in the last 7 years. Moreover, data on the labor market also turned out to be very contradictory: unemployment remained at the same level (3.8% with a forecast of growth of up to 3.9%), and the number of applications for unemployment benefits increased significantly - to almost 29 thousand (with a forecast of 20 thousand). Disappointing salaries. On the other hand, the average earnings level (including premiums) grew to only 3.2% - this is the weakest growth dynamics since April this year. However, without taking into account premiums, this indicator came out better than expected, being at around 3.5%. But inflation on a monthly basis scrambled out of the negative area, and remained at around 1.5% (with a forecast of decline to 1.4%) in annual terms. Core inflation reached the forecast level (1.7%), and the retail price index showed unexpected growth - both in monthly and annual terms.

So what to expect from the December meeting of the Central Bank? Last month, the Bank of England summarized the outcome of the meeting in two ways - on the one hand, the English regulator made it clear that if global economic growth does not stabilize, Brexit uncertainty will continue, and key economic indicators will continue downward trend , then the Central Bank may have to "intervene." But then the regulator hastened to declare the probability of an alternative scenario. If these risks do not materialize, then the issue of a gradual increase in the rate will be on the agenda again.

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Now, what has changed since the November meeting? The probability of a "tough" Brexit was reduced to zero, but at the same time, uncertainty about the prospects for the transition period increased. Key macroeconomic indicators show a slowdown. Many of the components of which came out in the green zone today even inflation, which still demonstrates weakness - especially if you recall the rate at which the corresponding indicators increased at least a year ago. As for the prospects for a trade war, there is also only a temporary "thaw" here. Obviously, the main battles of the negotiation process will unfold after the New Year holidays, so this topic has faded into the background. In this regard, the parties were able to avoid the escalation of the trade conflict on December 15, significantly defusing the overall situation. But in general, the problem is still far from being resolved.

All this suggests that the British Central Bank may take either a very cautious or frankly "dovish" position tomorrow. As a result, the pound has a chance to return to the range of 29-28 figures if the number of people who voted for the rate cut is more than two (general forecast 0-2-7) or Mark Carney will talk about the advisability of easing monetary policy in the foreseeable future. Moreover, the pound may show short-term growth in the region of the 31st figure, if the regulator takes a wait-and-see position, allowing the British economy to "freeze itself" after the approval of the Brexit deal. In the second scenario, the attention of the traders of GBP/USD will quickly switch to political factors, since Boris Johnson plans to submit a bill on Brexit to the House of Commons at the end of this week (namely December 20).

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