FOREX Fundamental analysis for EUR/USD
The surprise rate cut from the Swiss National Bank and the decision of representatives of the hawk wing of the Bank of England not to vote for tightening monetary policy set an example for other Central Banks. And now the head of the Bundesbank, Joachim Nagel, declares the ECB's readiness to reduce the cost of borrowing. Even if the Fed does not follow their example, this is enough for the EURUSD bears. The pair worked out the sellers' target mark at 1.08.
The recent cycle of tightening financial conditions has been unique. Central banks raised rates very quickly, which made it possible to talk about the most aggressive monetary restriction in decades. However, the mitigation phase will take place in a different way. Don't wait for fireworks. Regulators intend to move slowly, carefully analyzing the input data. At the same time, some central banks simply need to increase the speed of monetary expansion.
It is important to realize that at the moment, lowering rates is not an incentive for the economy, but a real antidepressant. When the ECB set the cost of borrowing at 4% in September, inflation in the Eurozone was 4.3%. That is, the real rates were about zero. Now, as the consumer price index has fallen to 2.6%, they have risen to 1.4%. The same indicator for Britain is 1.85%. This creates additional difficulties for European economies that are already quite weak.
The United States, by contrast, boasts the strength of economic growth. Large fiscal incentives during the pandemic, the growth of excess savings, the influx of migrants, the development of artificial intelligence technologies and accelerated productivity growth allow GDP to grow by 3% per year and above. Such an economy can withstand high real rates. In addition, its rapid growth, rather than a soft landing, increases inflation, forcing the Fed to think three times before adjusting monetary policy.
Bloomberg predicts an acceleration in the personal consumption index, which the Fed uses to analyze inflation, from 0.3% to 0.4% (mom). The three-month indicator may record the largest increase since May, and the six-month indicator may record a significant acceleration. Would the Fed really risk turning to monetary antidepressants in such circumstances?
Due to the strength of the American economy, the Fed may not be in a hurry to adjust monetary policy. But what is allowed to Jupiter is not allowed to the bull. The ECB does not have such an opportunity. It is possible that the federal funds rate will remain above 5% by the end of 2024, and the deposit rate will decrease by 75 basis points. If this happens, the yield difference between American and German bonds will increase further, and the EURUSD will fall below 1.05.
Thus, forex currency trading is changing the minds of investors. They are no longer so much interested in the time of the beginning of monetary expansion as in its speed. It is likely that the European Central Bank will have a much higher rate than the Fed. This provides a basis for further sale of EURUSD. The first target of 1.08 has been reached, we are going for the second one.
EUR/USD Technical analysis
At the end of the week, EUR/USD broke through the key support of the short-term upward trend in the range of 1.0855 - 1.0842. Now we can say that the trend direction has changed to a downward one. Starting on Monday, we begin to look for entry points to sales on an upward correction of the asset. Favorable prices for "bears" are located in the resistance area 1.0894 - 1.0885. The nearest target for sellers is the minimum mark of today. If the pair is fixed below the extreme, then the next target will be the Target zone in the range of 1.0729 - 1.0704.
The new trend boundary passes through 1.0940 - 1.0927. If EUR/USD rises to this zone, then we will also form short positions here.
In Thursday's Asian session, the GBP/USD pair is trading near the 1.2590 level, partially recovering the losses of the previous day. The upward trend is supported by the factors of John Murphy's technical analysis, however, market participants remain cautious in anticipation of the decision of the Bank of England, which will be announced today at 14:00 (GMT+2). Experts predict that eight of the nine members of the committee will vote to keep the current interest rate at 4.75%, without changing the policy.The pressure on the British pound increased yesterday after the publication of the minutes of the US Federal Reserve meeting. The regulator lowered the rate by 25 basis points to 4.50% and clarified the forecast for 2025, pointing to two possible rate cuts instead of the previously estimated three. At the same time, Jerome Powell, the head of the Fed, stressed that the probability of tightening monetary policy next year is extremely low. In addition, the Fed revised the unemployment forecast, reducing it from 4.4% to 4.2% for the current year, and also raised the GDP growth forecast to 2.5% for 2024.In the UK, fresh inflation data turned out to be higher than expected, which may affect the further policy of the Bank of England. In November, the consumer price index rose from 2.3% to 2.6%, and core inflation rose to 3.5%. This deviation from expectations by only 0.1% reinforces expectations of possible changes in monetary policy in the future.An important news for the UK economy was its official entry into the Trans-Pacific Partnership (TPP). The country has lifted tariffs on palm oil imports from Malaysia and simplified trade procedures for union members. These steps indicate the UK's desire to integrate into the global economy and strengthen international ties with the TPP participants.Technical analysis for GBP/USD for todayOn the daily chart, indicators indicate mixed sentiment. The Bollinger bands begin to turn into a horizontal plane, signaling the instability of the price range. The MACD remains in the selling zone, and Stochastic shows signs of oversold pound, which creates correction risks.Trading recommendationsshort positions after the breakdown of the 1.2550 level down with a target of 1.2450. We will set the stop loss at 1.2600.buy will be relevant with a confident breakdown of 1.2600 up with a target of 1.2700. The stop loss is 1.2550. 
FOREX Fundamental analysis for EUR/USD on December 19, 2024Trading is often compared to a race between the Fed and the markets, where the latter are usually ahead. However, this time the Federal Reserve surprised by causing sharp fluctuations in assets. The US dollar index has peaked since 2022, becoming the growth leader among other forex currency indices, stock markets have gone down, and treasury bond yields have declined. The reason was an unexpected revision of the Fed's plans. Instead of three stages of monetary easing in 2025, as market participants expected, the regulator laid down only two.Monetary policy is like driving a car in a thick fog — visibility is almost nonexistent, and you have to act extremely carefully. With the labor market cooling and inflation accelerating, the Fed's actions look like an attempt to drive a car blindfolded and with faulty brakes. The only safe solution in such a situation is to stop, which the Central Bank intends to do. However, these signals came as a surprise to investors.The markets expected that rates would decrease at every second meeting in 2025 — in March, June and September. In reality, only five of the nineteen FOMC representatives suggest more than two declines. In addition, the Fed's forecast for the Personal consumption Expenditure Index (PCE) was revised from 2.2% to 2.5%. Cleveland Fed President Beth Hammack even opposed the majority's decision to cut the rate by 25 basis points to 4.5%.These changes led to the fact that the futures market revised its expectations. Now the probability that the Fed will not cut rates at all in 2025 or will do so only once has increased from 38% to 58%. This caused the collapse of the EUR/USD exchange rate.Previously, it was believed that the neutral rate, which does not stimulate or restrain the economy, is below 3%. Now its level, according to Fed officials, is close to 4%. This means that the cycle of monetary policy easing is coming to an end.Unlike the Fed, the European Central Bank does not intend to stop yet. At the next two meetings, the ECB is likely to lower the deposit rate, which will increase the gap between it and the US federal funds rate. This creates additional obstacles for EUR/USD, which explains the depreciation.The previously designated target level for EUR/USD shorts at 1.03 is getting closer, and parity is already visible on the horizon. This is great news for those who sold the pair from the levels of 1.121 and 1.0615. The forex trading strategy leaves priority to short positions and assumes their strengthening on upward pullbacks and corrections.EUR/USD Technical analysisYesterday, EUR/USD changed its short-term trend to a downward one. The support area (B) 1.0491 - 1.0478 was broken and the lower target zone 1.0353 - 1.0326 was reached. At the moment, the pair is correcting upwards. The probable target of the correction is the resistance (A) of 1.0445 - 1.0435. After testing this resistance, it will be possible to consider new sales with the main goal in the area of yesterday's minimum.If the resistance area (A) is broken up during trading, the correction will continue to the resistance area 1.0495 - 1.0481. Sales of the instrument can also be considered from this zone. 
USD/CHF analysis for December 17, 2024During Tuesday morning trading, the USD/CHF pair continues to strengthen, developing a bullish trend that began last week. Quotes have updated the maximum from November 22 at 0.8955, however, market participants prefer to act cautiously, waiting for the results of the final meeting of the US Federal Reserve this year, which will be held on Wednesday at 21:00 (GMT+2). According to analysts, the interest rate will be reduced by 25 basis points to 4.50%. This scenario is already embedded in market prices, so it is unlikely to put serious pressure on the US dollar. Investors, however, will focus on long-term interest rate forecasts for the next three years, as well as on the possible economic policy of Donald Trump, who will take office on January 20.At the same time, the franc is under pressure from the unexpected decision of the Swiss National Bank (SNB) to reduce the rate by 50 basis points — from 1.00% to 0.50%. This step turned out to be more aggressive than market expectations, where a decrease of only 25 points was predicted. In an accompanying statement, SNB representatives stressed their willingness to adjust monetary policy in the future in order to keep inflation within the target values. The regulator also does not rule out interventions in the foreign exchange market to stabilize the franc, which investors still consider as a reliable safe haven asset. Inflation forecasts have been adjusted downwards: the average consumer price index is expected to reach 1.1% in 2024 (previously 1.2%), 0.3% in 2025 (against the previous 0.6%) and 0.8% in 2026 (previously 0.7%). The expected GDP growth in Switzerland will be about 1.0% this year and 1.0–1.5% next year (against the previous forecast of 1.5%). Meanwhile, the current inflation rate remains one of the lowest in the Eurozone. In November, the indicator was 0.7% in annual terms. The producer and import price index also decreased: on a monthly basis from -0.3% to -0.6% against the forecast of 0.2%, and in annual terms — from -1.8% to -1.5%. The SNB's quarterly report for the fourth quarter is expected to be published tomorrow at 16:00 (GMT+2).USD/CHF Technical analysis for todayOn the daily chart, the Bollinger Indicator shows steady growth. The MACD indicator continues to grow and maintains a strong buy signal. At the same time, Stochastic reached the overbought zone, slowed down and moved to a horizontal position, indicating possible risks of a correction of the US dollar in the near future.Trading recommendationslong positions after a confident breakdown of the 0.8957 level up with a target of 0.9037. The stop loss is set at 0.8915.sales with a rebound from the 0.8957 level and a breakdown of the key support of 0.8900 down. The target is 0.8827. We put the stop loss at 0.8957. 
On Tuesday, USD/JPY is trading with versatile dynamics around the 154.20 mark, not far from the local highs on November 25. The volatility of currency pairs remains restrained, as market participants are awaiting the results of the two-day meeting of the US Federal Reserve, which will be announced tomorrow at 21:00 (GMT+2).According to the CME Group, the probability of a 25 basis point rate cut is estimated at 95.4%, despite the steady recovery of the American economy and inflation, which has stabilized around 3.0%. At the same time, traders are analyzing possible actions of the Bank of Japan, taking into account the impact of the economic policy of the new White House administration.If President Donald Trump fulfills his promises to impose 25% duties on imports from China, the Japanese regulator is likely to react by devaluing the yen. According to a Bloomberg study, 52% of analysts believe that the Bank of Japan will continue to adhere to a tough policy in January, and 44% expect a rate hike to 0.25% at the December 19 meeting. Some experts point to the role of wage dynamics, believing that it will determine the position of the regulator closer to the spring wage negotiations. Steady wage growth outpacing inflation is considered by the Bank of Japan as a key criterion for revising the rate.The latest economic data from Japan show positive changes. The volume of orders for engineering products in October increased by 5.6% year-on-year after falling by 4.8% a month earlier, which significantly exceeded experts' expectations (0.7%). On a monthly basis, the indicator strengthened by 2.1%, exceeding forecasts. In addition, the Jibun Bank manufacturing business activity index from S&P Global improved from 50.5 to 51.4 points in December, and the index in the service sector increased by 0.3% after a slight decline a month earlier.The Daily chart shows an attempt to reverse the uptrend. The Bollinger Band indicator is expanding, hinting at the possibility of continued growth, but in the short term, the asset may remain overbought. The MACD indicator holds a steady buy signal, and the Stochastic has frozen at the maximum levels.Trading recommendationslong positions after breaking up the level of 154.50 with a target mark of 155.50. We will set a stop loss at the level of 153.87.sales with a confident breakdown down to the level of 153.87. The target mark is 152.70. Stop loss at 154.50. 
FOREX Fundamental analysis for EUR/USD on December 17, 2024A strong economy invariably supports a strong currency — this time-tested principle continues to prove its relevance. The latest business activity data again highlights the superiority of the US economy over the Eurozone. While the aggregate PMI of the Euroblock countries is only approaching the critical mark of 50 points, the American indicator has soared to a maximum in almost three years. Such a difference in economic growth undermined the position of buyers of EUR/USD and completed another attempt to increase the main currency risk.At the beginning of 2024, it was expected that US GDP would begin to slow down under the pressure of the most stringent monetary policy of the Federal Reserve System (Fed) in the last 40 years. Forecasts ranged from 1% growth to the likelihood of a recession. However, the actual figures turned out to be much higher. The US economy grew by 2.8% in the third quarter, and in the fourth quarter, according to forecasts by the Federal Reserve Bank of Atlanta, it may reach 3.3%. These results reinforce the gap with the Eurozone, whose prospects look much more modest.As the economy grows, inflation tends to increase. Americans are spending more actively, anticipating a shortage of imported goods due to the tariffs imposed by Donald Trump. In Europe, the situation looks different. ECB President Christine Lagarde said that core inflation no longer poses a serious threat to price stabilization, and some members of the governing council, such as Isabelle Schnabel, argue that the CPI is under control. These factors allow the ECB to continue the cycle of rate cuts, which, according to some experts, may include up to five stages in 2025.At the same time, the Fed plans to act more cautiously. September forecasts indicated four rate cuts in 2025, but the regulator's management was concerned that such steps could be perceived by the market as a signal of weakness in the American economy. In fact, the US economy is showing resilience: the labor market is strengthening, GDP is growing, and inflation has reached 2.7%. This suggests that in December some FOMC members may vote against further easing of monetary policy.Thus, the gap in the approaches of the Fed and the ECB to monetary policy will grow. The Fed's more cautious policy, reinforced by the possible consequences of Trump's tariffs, reinforces the difference in rates between the US and the Eurozone. This creates conditions for further weakening of the euro. Against this background, the forecast of EUR/USD falling to 1.03 by March and achieving parity by June remains relevant. The recommendation is to sell.EUR/USD Technical analysisThe short-term upward trend of EUR/USD remains. At the moment, the pair is trading in a downward correction. Yesterday, the bears tested the key support of the 1.0491 - 1.0478 trend. The zone was held by the buyers. Therefore, today it is advantageous to consider long positions from the support area with the first target at 1.0553 and the second at about 1.0629.For EUR/USD sales, it is necessary to break through the minimum on December 13 and consolidate below. In this case, it will be possible to consider short positions with a target in the lower Target zone of 1.0353 - 1.0326. 
AUD/USD analysis on December 16, 2024On Monday, AUD/USD is moving in a sideways corridor near the 0.6375 mark, continuing to show a decline against the background of moderate activity of the US dollar. Although the dynamics of the pair has slowed down somewhat in recent days, the overall trend remains downward.Despite the "hawkish" approach of the Reserve Bank of Australia (RBA), which keeps the rate at 4.35%, the national currency is under pressure due to weak business activity data for December. The manufacturing sector continues to be in a contraction zone. Business activity in the industry fell from 49.4 to 48.2 points. The indicator has remained below the threshold of 50 points for the tenth month in a row. The service sector also slightly deteriorated, from 50.5 to 50.4 points. Nevertheless, the labor market data for November brought temporary relief - the employment rate rose to 35.6 thousand. (against the projected 25.0 thousand), full employment rose to 52.6 thousand, and the unemployment rate fell to 3.9% with a forecast of 4.2%. However, these data were not enough to strengthen the Australian dollar, especially in the absence of confidence in reducing inflation risks.The US dollar index remains stable and is trading at 106.50, in anticipation of the Fed meeting on December 18. According to the CME FedWatch Tool, the probability of a 25 basis point rate cut is estimated at 93.4%. Today's publication of business activity indices may bring short-term changes to the market - a slight decrease is expected in the manufacturing sector (from 49.7 to 49.4) and the service sector (from 56.1 to 55.7).AUD/USD Technical Analysis for todayOn the daily chart, the AUD/USD pair continues to adjust above the support of the "expanding formation" pattern with boundaries in the range of 0.7100–0.6300.- Indicators strengthen sales signals.- The fast EMA lines of the alligator indicator are directed downwards, remaining below the signal line.- The histogram of the Awesome Oscillator (AO) indicator is in the sales zone.Trading recommendations- Sale: when the level of 0.6350 breaks down and the price fixes below it. The target is 0.6240. The stop loss is 0.6400.- Buy: when breaking up the 0.6400 level and consolidating above. The target is 0.6530. The stop loss is 0.6350. 
USD/CAD analysis on December 16, 2024In Monday morning trading, USD/CAD stabilizes around 1.4220, which corresponds to the record highs of April 2020, updated at the end of last week. There is low volatility of currency pairs in the market, as traders prefer to refrain from transactions in anticipation of the outcome of the meeting of the US Federal Reserve System, which will be held on December 17-18. Most market participants are confident in reducing the rate by 25 basis points to 4.5% per annum and are closely monitoring possible comments from the regulator on further steps.Today at 16:45 (GMT+2), S&P Global is expected to publish business activity indices in the manufacturing and services sectors for December. It is assumed that the values will remain close to the previous indicators — 49.7 points for industry and 56.1 points for services. At 22:45 (GMT+2), the head of the Bank of Canada, Tiff Macklem, will speak, and tomorrow investors will study inflation data in Canada for November. It is expected that the monthly dynamics of consumer prices will slow down to 0.0%, and the annual indicator will remain at 2.0%. The base index is expected to maintain values of 0.4% on a monthly basis and 1.7% on an annual basis.USD/CAD Technical Analysis for todayOn the daily chart, the Bollinger indicator continues to expand, which indicates support for the uptrend. The MACD indicator shows a steady buy signal, as the histogram is above the signal line. Stochastic is approaching the overbought zone and indicates the probability of a downward correction in the short term.Trading recommendations- Buy: after the breakdown of the 1.4250 level, up with a target of 1.4350. The stop loss is 1.4200.- Sale: after the breakdown of the 1.4200 level down with a target of 1.4100. The stop loss is 1.4250. 
Since the start of trading, GBP/USD has been showing moderate growth, recovering from a significant drop at the end of last week, when the bears updated the lows on November 27. The main factor of pressure on the pound was the weak macroeconomic statistics of the United Kingdom.The country's October GDP shrank by 0.1% on a monthly basis, repeating the results of September, although analysts had expected growth of 0.1%. Treasury Secretary Rachel Reeves noted that these figures are disappointing, but stressed the long-term focus of the authorities on economic recovery. Industrial production decreased by 0.6% after falling by 0.5% in September, with a growth forecast of 0.3%. In annual terms, the dynamics improved — a decrease of 0.7% compared to the previous indicator of -1.8%. The manufacturing sector also recorded a decline of 0.6%, although this was better than the previous decline of 1.0%.The UK economy is experiencing difficulties due to tax increases provided for in the new budget. Nevertheless, experts believe that the Bank of England is likely to maintain the current rate level at the next meeting.On Friday, the Bank of England updated its inflation forecasts. The forecast for consumer price growth next year increased from 2.7% to 3.0%, which may affect the further monetary policy of the regulator. Today, traders are waiting for business activity data for December. In the services sector, the indicator is expected to grow to 51.0 points, and in the manufacturing sector — to 48.1 points.Tomorrow, market participants will analyze the labor market report for October–November. The growth rate of average wages, including bonuses, is expected to increase to 4.6%, and excluding bonuses to 5.0%. On Thursday, the Bank of England will publish a decision on the interest rate, which is expected to remain at 4.75%.American investors will focus on the results of the US Federal Reserve meeting on December 18. The rate is projected to decrease by 25 basis points to 4.50%.Technical analysis of GBP/USD for todayThe main forex indicators point to uncertainty. The Bollinger bands reflect the flat dynamics. The MACD indicator continues to decline. Stochastic is approaching the oversold zone, suggesting a possible short-term upward rebound.Trading recommendations- Buy after a confident breakout of the 1.2650 level with a target of 1.2730. We will set the stop loss at 1.2600.- Sale: In case of a rebound from the 1.2650 level down and a breakdown of 1.2600 with a target of 1.2500. The stop loss is at 1.2650.