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EUR/USD: Dollar back in disgrace, while euro gains momentum The euro-dollar pair tested the 9th figure at the start of the new trading week for the first time since April last year. Such price dynamics is due not only to the weakening of the U.S. currency (the U.S. dollar index opened trading with a downward gap), but also to the strengthening of the euro (as evidenced by the main cross-pairs involving euro). Such a fundamental background allows EUR/USD bulls to move towards the upper line of the Bollinger Bands indicator on the D1 timeframe, which currently corresponds to the 1.0950 mark. Overcoming this resistance level will open the way for traders to the 10th figure. Dollar in disgrace The U.S. dollar is declining amid an almost empty economic calendar on Monday, following Friday's trading inertia. The U.S. dollar index fell from 102.30 to 101.70 on the last day of last trading week. The weekend didn't change traders' minds: today, the index resumed its downward marathon, heading to the base of the 101st figure. Major currency pairs changed their configuration accordingly, with the exception of USD/JPY, which rose after the publication of the minutes of the Bank of Japan's December meeting (according to some members of the Governing Council, the central bank should "clearly explain that expanding the yield range is not the first step in exiting the ultra-loose policy"). But in general, the greenback is under significant pressure. Recent releases indicate that the Fed is guaranteed to reduce the pace of rate hikes to 25 points, and will do so at its February meeting. On Friday, Fed Governor Christopher Waller (who has long been one of the main hawks in favor of an aggressive rate hike) advocated a 25-point scenario. Earlier, a similar position was voiced by other representatives of the Fed, in particular, Patrick Harker, Lorie Logan, and Esther George. Such statements were made amid a slowdown in U.S. inflation indicators: note that not only the consumer price index, but also the producer price index came out in the red zone. If this week, core PCE index comes out at least at the predicted level (not to mention the "red color"), the puzzle will be finalized. However, the market already de facto has no doubt that the Fed will reduce the pace of rate hike to 25 points. According to the CME FedWatch Tool, the probability of this scenario at the February meeting is estimated at 99%. I think additional comments are unnecessary here. Euro outlook Unlike the dollar, the euro enjoys support from the ECB. Representatives of the central bank are vying to voice hawkish messages, assuring traders that the regulator will not change its hawkish course. Last week, there were rumors in the market that the European Central Bank may reduce the rate hike to 25 points in March. The relevant information was published by Bloomberg, citing its sources in the central bank. The published insider, to put it mildly, surprised market participants (it was then that the EUR/USD pair updated the local high, dropping to 1.0795) since many ECB members voiced opposite signals in public. Christine Lagarde came to the aid of the euro here: speaking at the Davos economic Forum, she said that the European Central Bank is still far from its target, and the regulator has to take "several significant steps." The hawkish minutes of the ECB's December meeting only complemented her words, keeping the EUR/USD pair within the 8th figure. Today the "hawkish marathon" got its development. Firstly, ECB Governing Council member and Bank of Finland Governor Olli Rehn said that he sees all grounds for a significant interest rate hike "both in winter and this coming spring." Second, a Reuters poll of leading economists was released today. According to most experts, the European Central Bank will raise rates by 50 points, not only at the February meeting, but also at the March meeting. The polled economists also predicted that the rate will reach 3.25% by the middle of the year (the highest value since end 2008). Conclusions The fundamental background formed last week contributes to further growth in the price of EUR/USD. And to date, the situation has not changed: the comments of the head of the central bank of Finland, as well as the published Reuters survey, only added to the fundamental picture, allowing buyers of the pair to test the borders of the 9th figure. Today's main news flow is expected during the U.S. trading session. Eurozone consumer confidence index will be released (positive dynamics is expected), and ECB representatives Christine Lagarde and Fabio Panetta will give a speech (they can also support the euro). In general, the pair remains bullish. The price echelon has shifted one step up, to the range of 1.0850–1.0950. Probably, in the medium term, EUR/USD buyers will try not only to gain a foothold within the 9th figure, but also to precipitate the 1.0950 resistance level, which corresponds to the upper line of the Bollinger Bands indicator on the daily chart.

Hot forecast for EUR/USD on 20/01/2023 The multidirectional nature of the unemployment claims data in the United States was the main reason why the currency market is stagnant. Initial claims for state unemployment benefits dropped 15,000, although it should have increased by 2,000. However, if the data on initial applications turned out to be noticeably better than forecasted, the situation with repeated applications is diametrically opposite. According to forecasts, the so-called continuing claims should have grown by 6,000, but in fact it rose 17,000. Nevertheless, the total number of applications increased by 2,000, i.e. remained virtually unchanged. And as we can see from the forecasts, it was supposed to grow by 8,000. Well, the final data themselves were slightly better than forecasted. The number of jobless claims (United States): Today the macroeconomic calendar is completely empty, so it will probably be another stage of a flat market. And this may last till Thursday, when preliminary data on US GDP will be released. In the meantime, not much interesting macro data is expected. The EURUSD pair has been moving in the sideways range at the peak of the upward cycle all through the trading week. This price move indicates the process of accumulation of trading forces, otherwise the market would have already had a corrective move, which was brewing at the beginning of the week. On the four-hour chart, the RSI technical indicator is moving along the mid line 50, which corresponds to stagnation. On the D1 chart, the RSI is at 64, which points to the bullish sentiment among traders. Moving averages on the H4 Alligator are intersected with each other which means sideways trading. On the daily chart, moving averages are directed upward which corresponds to the overall bullish cycle. Outlook and trading ideas Based on the structure and the price movement, we can assume that the current flat is ending. A prolonged stagnation may serve as a lever for new speculative price spikes. The optimal strategy to consider is the method of outgoing momentum, which in the theory of technical analysis can indicate the subsequent direction of the price. Complex indicator analysis suggests mixed signals for the short-term and intraday trading on the back of the flat market. The overall bullish sentiment is still valid for the medium term.

Hot forecast for GBP/USD on 19/01/2023 UK inflation fell from 10.7% to 10.5% in December, and the pound gradually increased. Inflation eased for the second month, and it hints at the possibility of a more subdued increase in the Bank of England's interest rate. And these very expectations in regard to the Federal Reserve's actions just recently were the reason why the dollar is getting weaker. Moreover, during the previous meeting, two members of the Board argued for rate cuts. So, everything indicates that not only will the US central bank complete its cycle of interest rate hikes soon, but that the BoE could follow suit. And this means there is no reason for the pound to rise substantially. Investors haven't probably realized this fact yet. Inflation (UK): But the main reason why the dollar weakened during the European session was the latest US reports, forecasts for it were also negative. In December, U.S. retail sales softened 1.1% and industrial production fell 0.7%. So some pessimism about the dollar was justified. Especially when it became known that previous data had been revised downward. Retail sales climbed 6.0% and industrial production to 2.2%. And if you look at the final industrial report, things got even worse as the growth rate slowed to 1.6%. But the dollar started to rise after the data was released. It's all about retail sales, which remained unchanged with the revision. And this report is significant because it best reflects the state of consumer activity, which is the engine of economic growth. And the data turned out to be significantly better than expected, which of course will inspire confidence that the United States can avoid a recession. Retail Sales (United States): First of all, due to the inflationary dynamics in the UK itself, the pound's growth potential is extremely limited. Investors will have to gradually start changing their positions, not in favor of the British currency. But now it has nowhere to go today either. The total number of unemployment claims in the US may grow by 8,000. Of course, the growth itself isn't very significant, but the forecasts are still negative, so there is no reason for the dollar to rise, at least for today. Hence, the market is likely to consolidate around the current values. Unemployment claims (United States): GBPUSD crossed the resistance level of 1.2300. As a consequence, the upward momentum gave the pound the opportunity to come close to the December high. The subsequent swing was expressed in a pullback, indicating a decline in the volume of long positions. On the four-hour chart, the RSI technical indicator was in the overbought area, above the 70 line. This occurred when GBP crossed 1.2300 and approached the December high. Subsequently, there was a price pullback, which is expressed on the RSI indicator by its return below 70. On the four-hour and D1 chart, the Alligator's MAs are headed upward, which corresponds to the general bullish sentiment. Outlook The pullback stage brought the quote back to 1.2300, which, taking into account the current strengthening, is considered as the least possible price change. For the pullback to pass the stage of correction, the quote should return below 1.2250 on the four-hour chart. In this case, GBP could reach 1.2150. However, staying above 1.2300 may eventually restart long positions in the pound, and it could update the local high of the upward cycle. Comprehensive indicator analysis suggests a price pullback for the short-term and intraday trading. While the bullish sentiment is still valid for the medium term.

EUR/USD and GBP/USD trading plan for beginners on January 17, 2023 Details of the economic calendar on January 16 The economic calendar was traditionally empty on Monday. No important reports were published in the EU, the United Kingdom, and the Unites States. Martin Luther King Day was celebrated in the United States. For this reason, banks, funds, and stock exchanges were closed. Analysis of trading charts from January 16 EURUSD reached the 1.0800 level during the pullback stage, where there was an amplitude move within 70 pips. In fact, the market remains in an upward mood, otherwise there would be a full-blown correction. GBPUSD reduced the volume of long positions during the price convergence with the 1.2300 resistance level. As a result, there was a pullback of about 100 pips, which eventually turned into a stagnation. Economic calendar for January 17 Since the opening of the European session, data on the UK labor market have been published, which came out without any fundamental changes. Unemployment in the country remained at 3.6%. Employment increased by 27,000, while jobless claims rose by 19,700. Expectations coincided with the forecast; there is no reaction in the market. EUR/USD trading plan for January 17 Presumably, the 1.0800/1.0870 amplitude will focus the market on itself only for a while. As a result, the stagnation will end with an impulse emanating from the stagnation, which will indicate one of the possible scenarios. The first scenario considers the prolongation of the current upward cycle in the market in case of a stable holding of the price above the value of 1.0880 in a four-hour period. The second scenario considers the transition from a pullback stage to a full correction if the price holds below 1.0770 in a four-hour period. GBP/USD trading plan for January 17 Stagnation possibly serves as a process of accumulation of trading forces, which can become a lever for new price jumps. The 1.2150 level serves as a variable support, while the resistance is at 1.2300. In this situation, cardinal changes will occur only after the price stays outside one or another control level for at least a four-hour period.

The Fed promises to continue raising the rate, but the market no longer believes Today, January 12, Thursday, the US dollar dropped significantly once more. Let me remind you that last Friday, reports on the unemployment rate, the labor market, and business activity were released in the United States for the first time in 2023. 223 thousand people were employed, the unemployment rate declined to 3.5%, and the ISM index unexpectedly went below the 50.0 level. Generally speaking, the only ISM index that is detrimental to the dollar is the one for the services sector. The remaining news is all favorable in my opinion, but the demand for the US dollar is still down significantly. The demand for the dollar was steady at the start of this week, but today data on inflation in the United States was released, which did not appear to startle the market but sparked a strong reaction. The market anticipated a decrease in the consumer price index of 6.5% y/y, which exactly happened. The market also anticipated a 5.7% y/y decline in the base index. There were no additional significant occurrences today. It turns out that although both results from the same report were almost exactly in line with predictions, the demand for US dollars nonetheless decreased, preventing both instruments from starting (or continuing) to build the correction portion of the trend. It is vital to note that the subsequent activities of central banks, in this case, the Fed, are more significant than inflation itself. Michelle Bowman, one of the FOMC's voting members, recently predicted that the rate will increase because inflation is still too high. At a Florida event, Bowman stated, "I believe we can cut inflation without a big economic slump as the jobless rate continues at its historic lows. Other FOMC members had previously argued for the continuation of monetary policy tightening. However, the market appears to be responding that all interest rate increases have already been fully absorbed by the US dollar's constantly declining demand. The rate is anticipated to climb to a maximum of 5.5% by the market, though it may be lower following today's inflation report It is important to keep in mind that the demand for the currency is supported by a tighter monetary policy. Therefore, as expectations for the rate decline, so does the demand for the currency. Therefore, from a wave perspective, I continue to anticipate the development of downward trend sections. Despite their significant length and complexity, the market indicates that it is willing to build upward segments. Only figures on British GDP, European and British industrial production, and the American University of Michigan's consumer sentiment index are available this week. The recession in the UK has reportedly already started, thus the most significant GDP data is likely to show a decrease. If this is the case, it would be difficult to predict that the GDP will increase over a single month. I conclude that the upward trend section's building is about finished based on the analysis. As a result, given that the MACD is indicating a "down" trend, it is now viable to contemplate sales with targets close to the predicted 0.9994 level, or 323.6% per Fibonacci. The potential for complicating and extending the upward portion of the trend remains quite strong, as does the likelihood of this happening. The building of a downward trend section is still assumed by the wave pattern of the pound/dollar instrument. According to the "down" reversals of the MACD indicator, it is possible to take into account sales with objectives around the level of 1.1508, which corresponds to 50.0% by Fibonacci. The upward portion of the trend is probably over, however, it might yet take a lengthier shape than it does right now.

Hot forecast for EUR/USD on 12/01/2023 The market has been stagnating for a couple of days and only the US inflation report, which will be released today, can get it out of this state. As a matter of fact, investors are waiting for it. Especially in the light of Friday statements of representatives of the Federal Reserve, which basically boils down to a slowdown in the growth of interest rates. In principle, the US central bank did not hide the fact that this year it will complete the cycle of rate hikes. And it's clear that before that, from meeting to meeting the growth of interest rates will be reduced. But everyone was shaken by the statement that during the next Federal Open Market Committee meeting the Fed funds rate may be raised by only 25 basis points. This caused the dollar to weaken. In this regard, inflation forecasts are highly important. The fact is that the main forecast remains unchanged, and the growth rate of consumer prices should slow down from 7.1% to 6.7%. However, judging by the market behavior, as well as the nature of reports, traders might assume that events will develop according to the most optimistic scenario, and inflation will slow down to 6.5%. Such forecasts do exist, but they are not mainstream. And this creates an interesting perspective. Traders may believe in a broader decline in inflation, and when they see a slightly lesser slowdown, sentiment will change dramatically, and the dollar will begin to recoup its losses as investors drastically revise their expectations, and begin to assume a 50-point reduction in the rate is coming instead of 25. That will be the start of the correction. If inflation actually slows down more, then the potential for the euro's further growth is rather limited since it is excessively overbought. Inflation (United States): The EURUSD pair, after briefly being stuck in the 1.0710/1.0760 range, has finally crossed its upper limit. As a consequence, the upward cycle continued. The RSI technical indicator is moving within the overbought zone, indicating that long positions on the euro are way above its intrinsic or fair value. It is worth noting that the lack of a full-size correction in the market suggests that traders are ignoring the technical signs of it being overbought. On the four-hour and daily charts, the Alligator's MA are headed upwards, which corresponds to the current cycle. Outlook Keeping the price above 1.0760 will eventually lead to a breakdown of the subsequent resistance level of 1.0800. In turn, this step allows for the subsequent formation of a medium-term uptrend in the euro. As for the bearish scenario, traders will consider this option in case of a reversal, with the price moving below 1.0700. In this case, a correction is possible. In terms of the complex indicator analysis, we see that in the short-term, intraday and medium-term periods, there is still a buy signal because of the upward cycle.

Hot forecast for GBP/USD on 11/01/2023 In just a couple of days, the pound gained almost 350 points, and a local correction was justified. However, despite a completely empty macroeconomic calendar, which usually promotes all sorts of bounces, the British currency lost only 50 points. And it proves that investors don't really believe in the dollar's growth potential right now. At least, in the short-term perspective. Moving forward, I don't think the dollar is going to strengthen. Most likely, the market will continue to stand still. And it's been staying in the same place since the middle of yesterday. In fact, the macroeconomic calendar is also absolutely empty today. The market obviously needs a good reason for it to move in any direction. The pound can't grow because it's overbought, and there's no particular reason for it to fall. The pair's upward momentum has slowed down around 1.2200. As a result, there was a pullback of about 90 pips, which is considered as a process of regrouping trading forces. On the four-hour chart, the RSI technical indicator is moving in the upper area of 50/70, which reflects traders' interest in long positions on the euro. On the four-hour chart, the Alligator's MAs are headed upwards, which corresponds to the upward cycle. Outlook The current pullback has smoothly turned into stagnation along 1.2150, which may support new price surges. Using technical analysis, I expect long positions on the pound to grow even more once the price stays above 1.2200. In this case, the subsequent upward movement will resume. As for the bearish scenario within the corrective move, the price should stay below 1.2130 over the four-hour period. Based on complex indicator analysis, there is a variable signal for short-term and intraday trading due to a flat. In the medium term, there is still a buy signal.

EUR/USD and GBP/USD trading plan for beginners on January 10, 2023 Details of the economic calendar on January 9 The data on unemployment in the EU did not affect the market in any way, as figures remained at the same level. The eurozone unemployment rate remains at 6.5%, coinciding with the estimates. Analysis of trading charts from January 9 The EURUSD currency pair reached 1.0760 during the inertial movement from the 1.0500 support level. As a result, the local high of the upward trend from October last year was updated. During the rapid inertial course, the GBP/USD rose to the value of 1.2200, despite the fact that a few trading days ago, the quote was around the 1.1850 mark. The overbought condition is obvious, but speculators ignore this technical signal. Economic calendar for January 10 No important statistical data are scheduled to be published today. For this reason, investors and traders will monitor the incoming information flow. At 14:00 UTC, the speech of Federal Reserve Chairman Jerome Powell is scheduled. EUR/USD trading plan for January 10 In this situation, the inertial move still takes place in the market, where speculators ignore technical signals about the overbought euro. Updating the local high of the previous day may bring the price closer to the level of 1.0800. As for the corrective movement, this scenario will be considered by traders in case the price declines below 1.0700. GBP/USD trading plan for January 10 In this situation, there is a slight pullback, during which the quote returned to the level of 1.2150, while the upward mood is still maintained among traders. For this reason, the return of the price above the value of 1.2200 may restart the inertial move. At the same time, keeping the price below 1.2130 in a four-hour period may be the first technical signal for the formation of a full-size correction in the direction of the 1.2000 psychological level. What's on the charts The candlestick chart type is white and black graphic rectangles with lines above and below. With a detailed analysis of each individual candle, you can see its characteristics relative to a particular time frame: opening price, closing price, intraday high and low. Horizontal levels are price coordinates, relative to which a price may stop or reverse its trajectory. In the market, these levels are called support and resistance. Circles and rectangles are highlighted examples where the price reversed in history. This color highlighting indicates horizontal lines that may put pressure on the asset's price in the future. The up/down arrows are landmarks of the possible price direction in the future.

Hot forecast for GBP/USD on 09/01/2023 To put it mildly, the labor market data in the United States was fantastic. Especially when you look at the unemployment rate, which fell from 3.6% to 3.5%. Especially since the previous data was revised up from 3.7%. And it was projected to remain unchanged. In addition, 223,000 new jobs were created outside of agriculture. That's certainly not much more than the forecast of 220,000, but it's still a bit more to keep the unemployment rate stable. In other words, there's all the makings for further job growth. Although unemployment continues to be at record lows. But the interesting thing is that the dollar has been getting cheaper. It's all about the incredibly good macro data. Oddly enough, they show a clear overheating of the labor market. Especially since the United States is actively pursuing a policy to lure industrial production to its territory. And the question arises - where will companies get workers for all these companies with such a high level of employment? And in general, an overheated labor market can lead to a sudden and steep rise in unemployment and with it a catastrophic drop in investment. Not to mention losses for the companies themselves. After all, companies invest in business expansion and job creation, and when they can't find employees then the investment doesn't pay off. So companies have to write off losses and cut costs to at least compensate for the negative consequences. This prospect is the reason why the dollar is weakening. The unemployment rate (United States): Nevertheless, this situation creates prospects for the dollar's growth in the long term. The fact is that the monetary authorities have only one tool to fight overheating of the labor market - an increase in interest rates. In other words, although the Federal Reserve will slow down the pace of rate hikes, there is no question of its reduction in the near future. Most likely, the cycle of rising interest rates in the United States will continue through 2023. While the European Central Bank is likely to begin to gradually reduce its rate as early as the middle of this year. The pound appreciated by more than 250 points against the US dollar on Friday. As a result, it won back all the decline since the beginning of the month, and the quote was above 1.2100. It is worth noting that we have a sell-off in dollar positions across the Forex market. The H4 RSI has crossed the middle line of 50 upwards. This indicates a high demand for long positions on the pound. Moving averages on the H4 Alligator have changed direction from downward to upwards. This is a signal to buy. Outlook In this situation, the upward move may persist due to the speculative sentiment of traders. I expect a further increase in long positions once the price stays above 1.2150 on the four-hour chart. Take note that such rapid price changes often lead to excessive trading positions. For this reason, a technical pullback should not be ruled out. Based on complex indicator analysis, there is a buy signal for short-term and intraday trading because of the upward movement.

European stocks lower on New Year's Eve trading On the last trading day of 2022, the leading stock indices of Western Europe were balancing in the red zone after a strong growth the day before. Those that were sharply trading lower were stocks in the consumer, utilities and health care sectors. In addition, the volume of trading on European stock exchanges on Friday was lower compared to the previous days of the week in the run-up to the New Year. The stock markets of England and Germany had a shortened session, and on Monday trading floors will be closed due to the New Year celebration. At the time of writing, the pan-European Stoxx 600 fell by 0.5% - to 428.21 points. Earlier, Bloomberg, the leading American provider of financial information, reported that the STOXX Europe 600 indicator ended the current year with a drop of more than 12%. This will be the sharpest decline for European equities since 2018, and its main reasons are the negative consequences of the situation in Ukraine, the global energy crisis, as well as the permanent acceleration of inflation and decisive actions of the world central banks to combat it. French CAC 40 fell by 0.71%, German DAX dropped by 0.68% and British FTSE 100 - by 0.21%. At the same time, since the beginning of the current year, CAC 40 fell by 8.7%, DAX - by 11.9% and FTSE 100 increased by 1.4%. Leaders of the fall The share price of the German energy company Uniper SE plummeted by 4.3%. German biopharmaceutical company MorphoSys AG fell by 3.8%. The share price of the Swiss chain of pharmacies Zur Rose Group AG fell by 2.9%. British oil giant Pantheon Resources PLC collapsed by 43.4% after the company's pretax loss for fiscal 2022 almost doubled. Market Sentiment On Friday, European investors continued to analyze news about easing of coronavirus restrictions in China. The Chinese government has announced that the country will drop its Covid-19 quarantine requirement for passengers arriving from abroad starting January 8. At the same time, a negative test for coronavirus will be required to enter the state. In addition, Beijing authorities reduced the level of surveillance of the coronavirus, rejecting the legal basis for the introduction of enhanced infection control measures. In response to this move by Chinese authorities, some states have tightened requirements for visitors from the PRC. The United States, for example, is introducing mandatory testing for people arriving by air from China as of Jan. 5. Traders around the world have recently been seriously concerned about China's "zero-Covid" policy, as new and existing restrictive measures in China have had a negative impact on the country's economic activity. At the end of November, mass protests erupted in Shanghai against China's stringent Covid restrictions. The police dispersed protesters with gas canisters. After that, markets began to hope that mass protests in Chinese cities would force local authorities to loosen regional restrictions. Fresh news from China sent a welcome positive signal that the world's second-largest economy could return to robust growth. On Friday, European investors were also analyzing data for the countries of the region. Thus, according to new data from the Nationwide Building Society, UK property prices rose 2.8% year-on-year in December against November's 4.4%. Meanwhile, Spain's statistical office INE reported the country's annual inflation rate fell to 5.8% in December of 2022, the lowest since November 2021. Thus, in the outgoing month consumer prices rose by 5.6% against the November increase of 6.7%. At the same time, analysts had forecasted inflation at 6.5%. Trading results the day before On Thursday, the leading stock indices of Western Europe closed in the green zone. However, at the beginning of the trading session, the market was steadily pessimistic, caused by investors' concerns about the permanent acceleration of inflation and tight monetary policy of the world central banks. As a result, the pan-European Stoxx 600 rose by 0.68% - to 430.35 points. The French CAC 40 gained 0.97%, the German DAX gained 1.05% and the British FTSE 100 gained 0.21%. Those that were sharply trading lower were stocks in oil and gas and consumer companies. The share price of European oil corporations British Petroleum and Shell dropped by 0.7% and 0.3%, respectively. Companies were under pressure due to the sharp fall in world prices for crude oil (by more than 1%). The share price of key consumer companies - British Unilever and British American Tobacco - fell by 0.6%. Swiss drugstore chain Zur Rose Group AG grew by 5.2%. The share price of British online retailer THG Plc increased by 3.2%. European airlines easyJet PLC, Wizz Air Holdings Plc and Deutsche Lufthansa AG fell by more than 2%. German online retailer of shoes, fashion and beauty Zalando SE dropped 1%. The share price of the German truck manufacturer Daimler Truck Holding AG decreased by 0.8%. Adidas AG, a German manufacturer of clothing, footwear and accessories, decreased by 0.6%. The share price of Evraz Plc, a British metals and mining company, plummeted by 12.6%. British company Ocado Group Plc, which licenses grocery technology, sank by 1.5%. TThe share price of German energy company Uniper SE soared by 10.9%. German air carrier Deutsche Lufthansa AG dropped by 3.3%. An important factor supporting the stock market in Europe on Thursday was a strong performance of the U.S. stock exchanges. On Thursday, the Dow Jones Industrial Average jumped 1.5%, the S&P 500 soared 1.75% and the NASDAQ Composite gained 2.59%.

New Year Trading Schedule Dear clients and partners of the company, ForexMart wishes you Happy New Year and a wonderful holiday season! We are grateful to each of you for the trust and years of successful cooperation. May the year of the Black-Water Rabbit bring only ups, effective trading and financial prosperity! Also we draw your attention to some changes to the trading schedule during New Year holidays. Please take them into account and plan your trading accordingly. * December 30: UK100x – early close at 2:30 pm; #Brent.z – early close at 9:45 pm. December 31 – January 1: The trading is unavailable the whole day. January 2: Forex trading – normal hours; CFD Stocks, CFD Indices, CFD Futures, Metals – a day off. * The schedule is for informational purposes and can be changed at the discretion of the company. Best regards and Happy New Year, ForexMart team

Trading signal for GOLD (XAU/USD) onDecember 29 - 30, 2022: buy above $1,802 (21 SMA - 6/8 Murray) Early in the European session, Gold (XAU/USD) was trading around 1,806.05 above the 21 SMA and below the key resistance of 6/8 Murray located at 1,812.50. The positive sentiment in the markets triggered by the news from China lifted the market's spirits, thus boosting the demand for gold. But it could last a short time due to technical reasons. In the daily chart, gold is very overbought and it is expected that there will be a fall in the short term to the levels of 1,750 and 1,720. A return below 1,800 would make gold vulnerable to a decline to test the bottom of the uptrend channel around 1,794. A sharp break below could trigger further losses to the area of 1,781 (5/8 Murray). If bearish pressure prevails, it could reach the next support at 1,773 (200 EMA). On the 4-hour chart, we can see that gold could resume its bullish cycle if it trades above 1,802.50 (21 SMA). The next target is at 1,812 and the strong resistance area is at 1,823. Conversely, in the event that the XAU/USD pair trades below the psychological level of 1,800 we could expect a continuation of the bearish movement and it could reach 1,772 (200 EMA). The eagle indicator is giving a positive signal but has technically lost its bullish momentum and any technical bounce is likely to be seen as an opportunity to sell. If in the next few hours, gold fails to consolidate above 1,812, and while the price of gold is trading below this level, it could be seen as an entry point to sell. Our trading plan for the next few hours is to buy gold above 1,802 (21 SMA) with targets at 1,812 and 1,823. In the event that gold fails to break the resistance of 1,812, it will be seen as a signal to sell with targets at 1,795.

EUR/USD. Analysis for December 27, 2022 The euro/dollar instrument's 4-hour chart still shows a convincing wave marking, and the entire upward section of the trend is still very complex. It now has a clear corrective and lengthened form. The waves a-b-c-d-e have been combined into a complex correction structure, with wave e having a form that is significantly more complex than the other waves. Since the peak of wave e is much higher than the peak of wave C, if the current wave layout is accurate, construction on this structure may be nearly finished or may already be finished. In this scenario, we must construct at least three waves. In any case, I'm getting ready to lower the instrument. The market has demonstrated to everyone this year that it would rather wait and rest than actively work, so it may start as early as next year. The market is prepared to sell when an attempt to surpass the 1.0726 level, which corresponds to 200.0% Fibonacci, fails. Despite what might seem to be everything needed for it, the demand for US currency is still not increasing. The wave e's internal wave structure is extremely ambiguous, making it challenging to identify sub-waves. A depressing start to the new week. On Monday, the euro/dollar instrument increased by 20 basis points. Please note that these statistics are highly conditional, so readers should not draw any conclusions from them. The opening and closing levels of the day rarely fall on the same level. Therefore, even if there is no movement at all, one of the currencies will still rise or fall at least slightly at the end of the day. In contrast, there are currently no movements, amplitudes, or market participants. Due to the fact that many nations celebrated Christmas on Monday, the volume of trade and subsequent movements were negatively impacted. There were no changes from yesterday when it was possible to completely avoid opening the trading terminal. The wave marking hasn't changed in over a week. No news context is provided. I still anticipate a decline in quotes based on the current wave markup because I think the upward trend section is finished. The markets will be ready to increase demand for the euro currency if an attempt to break the 200.0% Fibonacci mark is successful. Many analysts discussed the potential movements of the instrument in January 2023 in the final days of the previous year, and the majority of them agreed that the US currency should start to strengthen. I concur with this viewpoint in light of the wave analysis. You must wait because there have been no movements at all thus far. Maybe just until the holidays are over, or maybe it will be much longer. I don't believe the market will start operating actively on January 1 right away. Nearer to the middle of next month, active work is most likely to be seen. Conclusions in general I draw the conclusion from the analysis that the upward trend section's construction has grown more intricate and is almost finished. As a result, I suggest making sales with targets close to the estimated 0.9994 level, or 323.6% Fibonacci. Although there is a chance that the upward portion of the trend will become even more extended and complicated, and the likelihood that this will happen is still high, at least we now have a signal for a decline from which we can start. The wave marking of the descending trend segment noticeably becomes more intricate and lengthens at the higher wave scale. The a-b-c-d-e structure is most likely represented by the five upward waves we observed. After the construction of this section is complete, work on a downward trend section can start.

ForexMart wishes you a Merry Christmas and Happy New Year! Dear clients and partners, ForexMart heartily congratulates you on the upcoming holidays. This largely difficult year is finally coming to an end, and we are sure that only positive events await all of us in the nearest future! We hope that you and your family are healthy and full of life to celebrate Christmas with joy and enter the new year 2023 with optimism! We wish you happiness, prosperity, realization of all your plans and stable profit and confidence in every transaction! We also draw your attention to some changes in the trading schedule on December 26, 2022: trading Forex, CFD Stocks, CFD Indices, Metals and CFD Futures will be closed all day. Please plan your activities accordingly. Sincerely yours, ForexMart team

EUR likely to recover This week, the euro has been extremely volatile. After a sharp rise amid the weakening of the US dollar, it rolled back again. However, there is still a chance for recovery. On Thursday morning, the European currency noticeably declined against the US dollar. Traders are now looking forward to the ECB meeting. The central bank will announce its rate decision as well as provide comments on the likelihood of a recession. Analysts believe that the euro could take advantage of the situation and resume an upward movement. Currently, the EUR/USD pair is trading near 1.0655, trying to reach new highs. The euro has a high upside potential because the greenback is climbing solely thanks to the Fed's hawkish rhetoric. However, this bullish momentum may weaken at any moment. According to Credit Suisse, by the end of 2022, the EUR/USD pair is projected to test the May high of 1.0800. As the New Year and Christmas holidays are approaching, many analysts have once again brought up the topic of the parity level. Opinions are polarized. Many FX strategists do not expect the pair to retreat to this level, while others believe that the odds are extremely high. Economists at Rabobank reckon that the EUR/USD pair is likely to reach parity in 2023. Now, speculators are digesting the results of the Fed meeting. The central bank raised the interest rate by 50 basis points to 4.25%-4.5% on an annual basis. The fed funds rate is expected to peak at 4.75%-5.00% next year. Fed officials confirmed that they would stick to further tightening to tame inflation. The so-called dot plots show that Fed policymakers have a median forecast of 5.1% for the fed funds rate at the end of 2023. The watchdog also said it would not plan to cut the key rate over the next year. The Fed also expects its rate to come down by the end of 2024 to 4.1% and to 3.1% by the end of 2025. Apart from that, the Fed will continue to reduce its balance sheet. It announced this move in May of this year and started to trim its balance sheet in June. Currently, the Fed's assets stand at $8.6 trillion. Now, the central bank's main priority is to cap inflation, pushing it to the 2% target. Inflation is still high although it is gradually decreasing. The Fed sees inflation risks 'weighted to the upside'. For this reason, it will stick to a hawkish stance until inflation declines to the target level. Later, the ECB will announce its rate decision. According to preliminary forecasts, the ECB is projected to hike the key rate by 50 basis points, taking it to 2.5%. Earlier, the ECB raised the rate by 75 basis points. In addition, it will also unveil its macroeconomic projections. Analysts at Credit Suisse contemplate that a 50 basis point rate hike could adversely affect the euro. However, it will hardly undermine the bullish trend. It might occur only if Christine Lagarde provides rather dovish comments on the future plans for monetary policy and the final range for the key rate. Such a scenario looks unlikely, Credit Suisse pointed out. However, persistently high inflation and rising wages increase the chance of a 75 basis point rate hike. If so, the euro will definitely rise.

More profit with reduced spreads for Brent Dear traders, ForexMart is glad to announce the reduction of spreads when trading Brent crude oil on Classic, Pro and Cent accounts. These changes will allow you to increase your profits and trading income. Also we want to warn you, that in the light of recent events on the world oil market, the cost of energy carriers may fluctuate significantly. Therefore, please note the probability of high volatility during the trade and act accordingly to have benefits from both a rise and fall in oil quotes. You can find more detailed information on a specific trading instrument here. There you can see all the current spreads for the selected trading instrument. By the way, do not forget about the opportunity to contact ForexMart customer support service – our specialists are always happy to inform you on any question. Best regards, ForexMart team

USD/JPY badly hurt by inflation, waiting for a counter shot from the Fed chair Yesterday was a black Tuesday for the dollar. A cooler than expected US inflation report sent the greenback into free-fall in all directions. The biggest losses were sustained by USD/JPY. Just like last month, U.S. inflation gave traders a shocking surprise. The consumer price index increased by only 7.1% from a year ago. That was less than economists' preliminary estimate of 7.3% and the previous value of 7.7%. The so-called core CPI, excluding volatile food and energy prices, also turned out to be softer. It rose 6% on an annual basis against a forecast of 6.1% and an increase of 6.3% in October. The significant reduction in inflationary pressures eased the market's hawkish expectations about the Federal Reserve's future monetary policy. Following this data, the dollar collapsed on all fronts. Yesterday, the DXY index plummeted about 0.9% to 104.02. The USD/JPY pair showed the worst dynamics, as the yen jumped, boosted by a rally in Treasuries. US bond yields sank with the US 10-year falling from 3.60% to 3.43%. In this backdrop, the major collapsed by more than 250 points, or 1.5%. Tuesday's low was the lowest of the week at 134.67. Such a sharp decline in USD/JPY significantly damaged the outlook for the dollar. The price is back under the area of the 200-day Simple Moving Average, which indicates a clear technical advantage of the bears. A break under 134.60 would expose the next support around 134.10. Below attention would turn to the monthly low at133.60. According to analysts at Rabobank, by the end of the week, the USD/JPY risks falling even lower, if the bears stay the course. The downtrend may get support from today's Fed monetary policy meeting. If the Fed's stance turns out to be more dovish, there is a high probability that the USD/JPY pair will test the level of 130.00 even before the weekend. It has not been uncommon for the yen to fly 500 pips in a week, experts said. Eyes now turn to the Fed meeting with investors particularly interested in the press-conference of Fed Chairman Jerome Powell. Investors have already fully taken into account the possible slowdown in rate hikes in the U.S. Now most market participants expect that the rate will be raised not by 75 bps, but only by half a percentage point. If the forecast comes true, it probably won't put much pressure on the dollar. What could really bring down the U.S. currency is the Fed's hint at lower interest rates. In light of the latest U.S. inflation data, traders have revised their forecast for peak interest rates downward. At this point, the rate is expected to rise to 4.8% next year, after which the U.S. central bank will wind down its anti-inflation campaign. The lower end rates also suggest a less drastic tightening. Many traders are now inclined to expect the Fed to raise interest rates by 25 bps in February and March. Such a scenario is extremely unfavorable for USD/JPY, which rose to 30-year highs this year due to a strong interest rate differential between the Fed and the Bank of Japan. Now that there is hope for a less aggressive rate of the U.S. central bank, the yen might regain its lost ground. However, let's not bury the dollar just yet. Its fate is now completely in the hands of Powell. Many analysts believe that Powell will try to convince investors that the current slowdown does not mean a dovish pivot. Most likely, the Fed chief's main argument for further tightening will be the fact that inflation is still very high. It is now running three times higher than the central bank's target level. Earlier, Powell repeatedly stressed that officials won't prematurely end their assault against inflation until the consumer price index returns to 2%. If he succeeds in strengthening the hawkish expectations of the market, the dollar may gain support and consolidate in tandem with the yen in the short term.

Weekly forecast for EUR/USD, USD/JPY, GBP/JPY, USD/CAD, NZD/USD, and GOLD from December 12 (simplified wave analysis) EUR/USD Analysis: The September 26 incomplete wave algorithm determines the short-term trend of the major European currencies. The movement's overall level has now surpassed the D1 scale. After its breakout, the intermediate resistance became support. The quotes have been forming an imperfect interim correction over the past week. Forecast: The general sideways trend of euro price fluctuations is anticipated to continue in the early days of this week. Its second half is more likely to see an increase in volatility, a reversal, and a continuation of the price rise. Potential zones for reversals Resistance: - 1.0760/1.0810 Support: - 1.0450/1.0400 Recommendations: Sales: are potentially unprofitable and have limited potential. Purchases: Your vehicles may be suggested for trading transactions once the corresponding signals for those vehicles appear in the support zone. USD/JPY Analysis: The imperfect algorithm of the descending stretched plane of the major pair of the Japanese yen determines the primary direction of intraday trends. The wave has reached its peak. The price breached a strong support level that had previously served as resistance. Forecast: The price of the pair anticipate mainly moving "sideways" along the predicted resistance over the coming few days. You can anticipate a reversal and a continuation of the bearish course closer to the weekend. The calculated support represents the lower bound of the expected weekly entry of the pair. Potential zones for reversals Resistance: - 137.50/138.00 Support: - 133.60/133.10 Recommendations: Purchases may be made during different sessions. It is advised to purchase a fractional lot due to the low potential. Sales: this will only be important once your vehicle's corresponding reversing signals appear in the resistance zone area. GBP/JPY Analysis: Since the end of September, the waves on the pair's chart between the British pound and the Japanese yen have been descending. The wave structure is still undergoing correction as a horizontal plane forms. There aren't any completion signals at the time of analysis. Forecast: The general lateral mood of the pair's fluctuations is anticipated to persist this week. When there is likely pressure on the resistance zone, you can watch for a change in course. Most likely, the decline stops at the calculated support. Potential zones for reversals Resistance: - 168.60/169.10 Support: - 164.00/163.50 Recommendations: Small-lot purchases are possible during a single day. Lowering the trading lot is safer. Sales: are available following the occurrence of verified reversal signals in the vicinity of the resistance zone. USD/CAD Analysis: The Canadian dollar chart's most recent wave structure, which is useful for forecasting and trading, is directed downward and has been decrementing since September 26. In its structure, the middle part (B) is formed. After it is finished, part (C) will come next, bringing the wave's overall wave scale to the level of the reversal. Forecast: The upward movement is anticipated to continue at the start of this week, up to the limits of the calculated resistance. When a reversal forms and the downward course resumes, you can wait for it to happen. Potential zones for reversals Resistance: - 1.3740/1.3790 Support: - 1.3190/1.3140 Recommendations: Purchases: are highly risky and could end up being unprofitable. After the emergence of reversal signals in the vicinity of the resistance zone, sales may be advised. NZD/USD Short analysis Since the end of September, an upward trend has been forming on the chart of the major New Zealand dollar pair. The price has reached a strong potential reversal zone over a broad timeframe. The wave structure's analysis suggests that quotations could increase to their maximum level. Forecast for the coming week: The likelihood of a sideways flat at the start of the upcoming week is very high. The price could move downward, but only as far as the support boundaries allow. The second half of the week should see the most activity and the start of price growth again. Potential zones for reversals Resistance: - 0.6500/0.6550 Support: - 0.6350/0.6300 Recommendations Sales in the vicinity of the resistance zone should only be made once confirmed reversal signals have appeared. Purchases: advised by a cut-down quantity from the support zone. The resistance zone restricts the potential. GOLD Analysis: A downward wave has been driving the trend in the gold market since March of this year. Gold prices have been correcting over the previous two months, forming the middle of the wave. The price is close to a significant resistance area at the time of analysis. The ascending section's structure needs to be completed. Forecast: The upward movement vector is anticipated to carry on this coming week until the resistance zone rise is fully completed. A brief decline in the support area is not ruled out over the next few days. Potential zones for reversals Resistance: - 1830.0/1845.0 Support: - 1785.0/1770.0 Recommendations: There won't be any restrictions on sales in the upcoming days. Purchases: Within the parameters of individual trading sessions, fractional lots may be purchased from the support zone. Reasons: Each wave has three components in a simplified wave analysis (UVA). The final, incomplete wave is examined at each TF. The dotted line depicts the predicted movements. Be aware that the wave algorithm needs to account for the instruments' temporal movement length!

EUR/USD. The Fed to set the stage for longer drop in USD in 2023 The euro seems to leave its lows behind. What does the EU currency await next year? In 2022, the energy crisis affected the EUR/USD pair significantly. It triggered the strongest collapse of the European currency. According to analysts, the peak of fears about the energy crisis in the eurozone has passed. There are reasons for optimism now. "Outside of an unseasonably harsh winter, the energy situation in Europe looks manageable given the securing of alternative energy supplies and double-digit energy demand erosion. The drawdown of critical stocks is already progressing better than feared," NatWest reported. The key factor for the euro/dollar pair exchange rate should continue to be seen primarily through the lens of the balance of payments and terms of trade shift driven by energy prices. The trade deficit has worsened this year. The cost of energy imports skyrocketed after Russia cut gas exports to the region. As a result, the region's current account became deficit for the first time in years. NatWest economists expect the euro area's new trade deficit to be counterbalanced by positive net capital flows. "There is potential for earnings and holdings to be repatriated if the USD strengthens further," the experts noted. However, winter has just started and it is too early to make any conclusions. If temperatures in Europe fall below critical levels, investors may focus on the supply problem again. In December, a sharp cold snap is expected in the region, which could lead to a noticeable increase in consumption. "The winter may turn out to be colder than average, but it's impossible to have that as a base case. Yet valuations appear to include an unrealistically high probability of such a risk case," NatWest added. It is unlikely that cyclical lows in the EUR/USD pair will be revised next year. Its decline should also be limited to a rebalancing of central bank reserves. The rebalancing should occur to the detriment of the greenback and to the benefit of currencies such as the euro. This could mean that market players will have to sell USD to buy other currencies in their reserves every time the US currency rallies. The downtrend for the dollar is inevitable, it is a question of timing. In the coming months, its exchange rate is expected to fall as the peak of the Fed's rate hikes is reached. NatWest's forecasts for the euro/dollar pair are relatively contained. At the end of the first quarter, the quote should remain below 1.0500, and it should grow up to 1.0600 by the end of the second quarter. At the end of the third quarter, it is projected to rise to 1.0700 and 1.0800 by year-end. Short-term outlook On Thursday, the EUR/USD pair attempted to stabilize above 1.0500. The technical picture suggests that buyers maintain control over the market in the short term. On Thursday, markets expect the weekly US labor market data. Traders are likely to ignore this report. This means that the EUR/USD pair's direction will be driven by the market sentiment with regard to risk. The growth of the major US indices will hinder the upward trend of the US dollar, which will help the EUR/USD pair to rise. A negative shift in sentiment will have the opposite effect on the quote. The list of events for the euro includes a speech by ECB head Christine Lagarde at a virtual conference. However, we should not expect any important statements on the prospects of rates, as the ECB is in silent mode ahead of next week's monetary policy meeting. Thus, risk appetite will have a huge importance for the short-term outlook. The intermediate resistance level is at 1.0540, further - 1.0580, and 1.0600. The bearish scenario should be considered after the price breaks through 1.0500. Following this scenario, the euro may fall to the area of 1.0460 and 1.0430. Bulls need to protect the level of 1.0450 to prevent the bearish scenario. Since no fundamentally important events are expected in the short term, investors are again focused on recession risks. This now helps keep the greenback from falling. On Thursday, the US dollar index fixed above 105.00, continuing to rise this week and benefiting from risk aversion in the market. Support was also provided by speculation that the Fed will continue to raise rates and hold them higher longer after the release of unexpectedly strong US employment, services, and manufacturing data. Now traders are waiting for data on CPI in the US to be released next week, as well as the Fed meeting, where a more moderate rate hike of 50 bps is expected. In general, the US dollar looks oversold, it has experienced its strongest monthly drop since 2009. A correction is possible in the coming weeks. However, it will resume its decline next year. Prerequisites for a longer fall in the exchange rate may be created by the Fed.

Will the dollar still be at war? USD/JPY forecast for 2023 The USD/JPY pair plummeted in November, which made many question its bullish potential. However, the dollar's recent growth convinces investors otherwise. So what to expect from the major? The dollar is winning so far The greenback rose 0.3% against its major peers on Wednesday night. The dollar was supported by rising concerns about the global recession. The day before, three leading U.S. banks - J.P. Morgan, Goldman Sachs and The Bank of America - said they expect a slowdown in global economic growth next year, as rising inflation is threatening consumer demand. The pessimistic outlook reinforced the anti-risk sentiment that prevailed for the third consecutive session. The MSCI All-Country World Index, which tracks stock market performance in 48 countries, fell 1.26%, down from a three-month high last week. The loss of appetite for equities and increased demand for the dollar was also triggered by strong US macrodata. Recall that earlier this week the Institute for Supply Management (ISM) said that economic activity in the services sector grew from 54.4 to 56.5 in November. The data followed Friday's report from the U.S. labor market, which also pleased dollar bulls. The nation's NonFarm Payroll employment rose more than forecast last month. The portion of optimistic data greatly strengthened the market's hawkish expectations for further monetary policy by the Federal Reserve. Currently, most traders expect the U.S. central bank to raise the rate by 50 bps next week. The probability of an increase by 75 bps is only 5%. However, talk of a higher peak in U.S. interest rates has returned to the market. Many investors believe the rate could reach 5.25% in 2023, whereas now it is in the 3.75-4% range. The hope that the Fed will continue to raise rates next year and keep them high for a long time acts as a very powerful trigger for the dollar at this point. This factor particularly helps the greenback against the yen. After USD/JPY plummeted to a 3-month low of 133.64 last week, it has now gained 3% and has managed to stay above 137. There aren't many new factors that can strongly influence the asset's dynamics now. In the coming days, investors will focus on two events: the US consumer price index for November and next week's Fed meeting. If investors see more robust inflation and hear hints of a higher peak in U.S. interest rates from U.S. officials, it will likely trigger a new wave of growth in the USD/JPY pair. What's in store for the USD/JPY next year? In November, the U.S. currency posted its worst monthly performance in 14 years against the yen. It fell by more than 7% due to fears that the US central bank is going to slow the pace of rate hikes. However, most currency strategists, recently surveyed by Reuters, believe that in the next few months, USD/JPY will be able to hold its annual growth, which amounted to 20%. The growing threat of recession in the U.S. and other countries should provide support to the dollar. In the backdrop of risk aversion, the greenback will once again feel a surge of strength, which will help it recover its recent losses on all fronts, even against the yen. "For now, the forces that have supported the USD this year remain valid, despite the recent correction lower. Other currencies do not look as attractive yet," said Athanasios Vamvakidis, head of G10 FX strategy at Bank of America. In the BofA baseline, the U.S. dollar will remain strong early next year and will only start a more sustained downward path after the Fed pauses. Despite the dollar's recent pullback, major currencies are not expected to recoup their 2022 losses against the USD until at least late 2023, the survey showed. Analysts estimate that the Japanese yen, down nearly 20% for the year and currently trading around 136.50 per dollar, was expected to change hands around 139.17, 136.17 and 132.67 per dollar over the next three, six and 12 months respectively.

USD unlikely to start long-term rally The US dollar managed to settle at the current highs thanks to upbeat US macro stats. The euro. on the contrary, dived down. Nevertheless, analysts believe that the greenback will hardly will be able to start a long-term rally even though it has risen significantly in the short term. On December 5, the greenback grew markedly against the euro amid positive reports on the US PMI Indices. In November, the ISM Services Index increased to 56.5% from October 54.4%. The reading surpassed forecasts as economists had anticipated a decline to 53.3%. Unexpectedly strong macroeconomic reports helped the greenback regain momentum. On December 6, the uptrend continued but it was not as strong as the day before. The dynamic of the US currency is relatively calm as the economic calendar is empty. At the same time, the EUR/USD pair was trading at 1.0487, trying to consolidate at the recent highs. In October, factory and durable goods orders also exceeded forecasts. Market participants were surprised by a sharp increase in the ISM Services Index. According to economists, it signals a rise in inflationary pressure in the service sector although some signs of disinflation have already been seen in the commodity sector. Analysts at the St. Louis Fed point out that current inflation expectations in the United States somewhat reflect the effectiveness of the Fed's hawkish stance. They are mainly fueled by geopolitical woes and strong US macro stats. They also note that there may be a lull on Forex. Only on December 6, the US trade balance report is due. According to preliminary estimates, the trade deficit is expected to grow to $80 billion from the previous $73.3 billion. Next week, several central banks will hold their monetary policy meetings. Investors are curious to find out the size of the rate increase. The Fed is expected to hike the interest rate by 50 basis points, up to 4.25%-4.5% at the December meeting. There is also a chance that the Fed could take a pause in monetary tightening. Fed Chairman Jerome Powell admitted that "slowing down at this point is a good way to balance the risks." Yet, he added that the watchdog would keep raising rates as "restoring price stability will likely require maintaining a restrictive policy stance for some time." Against this background, a slight decline in the US currency is possible. Last month, the greenback noticeably weakened. However, it will hardly start a downtrend in the near term. A downward reversal could take place after a period of high volatility, analysts at MFK Bank pinpointed. They reckon that the US dollar could remain volatile in the next three to four months. By the end of 2023, it may drop significantly. At the same time, they see no reason for a prolonged decline of the greenback although it is unable to start a steady correction due to current economic conditions. The US currency may lose ground if the Fed takes a less hawkish stance. However, if the Fed remains strongly committed to aggressive tightening, it will boost a long-term rally of the US currency. Hence, It will recover next year.

EUR/USD regains upside position, dollar left with one trump card Markets prefer to shoot first and then think later. Otherwise, they would miss the moment. When ECB President Christine Lagarde said that central banks should pursue policies that would anchor inflation expectations, investors began to buy the euro with renewed vigor, pushing EURUSD quotes to the highest levels since June. In reality, however, Lagarde's phrase does not guarantee that the deposit rate will rise by 75 bps in December. No matter how this shot turned out to be a blank. The logic of investors selling the U.S. dollar is clear: inflation is slowing and will continue to do so, which means the Fed does not need to take giant steps down the road of tightening monetary policy. The factor of an aggressive federal funds rate hike, along with U.S. exceptionalism and high demand for safe haven assets, was the key driver of the EURUSD rally. If the ECB starts to catch up with the Fed, the dollar has one less trump card to play. Lately, the macrostatistics of the euro area has been pleasantly surprising, which is reflected in the growth of the index of economic surprises. It is quite possible that the currency bloc will either manage to avoid recession or the recession will be quick and insignificant. It looks like the U.S. is not as far from the eurozone as previously thought. A change in investors' outlook on the matter has given EURUSD a helping hand. Dynamics of Economic Surprise Indices In fact, the U.S. dollar has only one trump card left—its status as a safe-haven asset, and even that fails. When the yield of Treasury bonds grew, the competitors of the grenback in the face of gold, yen and franc were in disgrace. However, the decline in interest rates on debt has turned them from outsiders into favorites. As a global recession approaches, investors will no longer park their money in North America, but will prefer Japan, Switzerland, or a perpetual asset. Jerome Powell had a chance to turn things around. Had he voiced his dissatisfaction with financial conditions, the EURUSD pair would hardly have been able to soar above 1.05. The weakening of the latter makes it difficult for the Fed to fight inflation, but the central bank also seems to believe that the PCE will continue to slow. Dynamics of financial conditions in the USA Unlike Lagarde, who believes that the global economy is entering an era of volatile inflation. That is why central banks should anchor inflation expectations at the target level of 2%. Households must trust that their work will lead to price stability. That's the only way to win. Volatile inflation makes it doubtful that EURUSD will continue to go further upward in the same way as in October and early December. Most likely, it will be stormy. In technical terms, the euro approached the target by 161.8% by the Crab pattern within an arm's length. It is located near the $1.061 mark. A rebound may follow from it or from the 1.057 pivot point, which will allow to partially take profits on the longs formed above 1.0395. Subsequently, we use pullbacks to buy EURUSD.

EUR/USD. All eyes on Nonfarm Traders are focused on today's NonFarm Payrolls report. Key US labor market growth data is especially important right now in light of recent events. If the data lets the dollar bulls down as well (in addition to the PCE and ISM manufacturing index), the greenback will bear significant pressure in all major pairs. Also, keep in mind that the NonFarm Payrolls will be released less than two weeks before the Federal Reserve's December meeting. The last speech of Fed Chairman Jerome Powell was not beneficial for the dollar (in my opinion - undeservedly), while a disappointing labor market report will only add fuel to the fire. In that case, the EUR/USD bulls, in particular, can already think about conquering the 6 figure in the medium term. In general, recent events are not unfolding in favor of the U.S. currency. And it is not only because of objective circumstances. For example, the market reacted quite adequately to the decline of the ISM manufacturing index, which collapsed to 49 points, reaching its lowest value since May 2020. Traders also reacted fairly to the slowdown in the core PCE index, although this slowdown was minimal (and predictable). No complaints here, as they say. At the same time, in my opinion, market participants are interpreting too many fundamental factors against the greenback - even in those cases where there is a less favorable aspect of the issue. For example, Powell said during his last speech that the time to reduce the pace of rate hikes "may come as soon as the December meeting." At the same time, he said that the final level of the federal funds rate will likely be higher than the September forecasts. It is noteworthy that Powell had previously voiced both theses, and each time the market reacted differently to his words. Lately, the fundamental environment has not been in favor of the greenback: traders are keenly reacting to negative information for the dollar and are quite skeptical to positive (hawkish) signals. A vivid example of this is the market's reaction to Powell's speech: market participants went with the dovish messages and chose to ignore the statement that the final rate will be at a higher level. All this suggests that today's Nonfarm data will also be treated in a "special" manner. In my opinion, the data can only support the dollar if all components of the report come out in the green. Otherwise it will be interpreted against the greenback. Let me remind you that dollar bulls were not impressed by the last (October) Nonfarm data. Specifically, the unemployment rate climbed to 3.7% (from the previous value of 3.5%) and the average hourly wage growth rate slowed on an annualized basis to 4.7%, whereas it has been consistently above or in line with the 5% level since January. The share of the economically active population in October slightly decreased, but still, to 62.2%. All of the aforementioned indicators came out in the red, much to the disappointment of supporters of the strong dollar. After this report, the odds of a 75-point rate hike at the December meeting dropped to 20% (according to the CME FedWatch Tool). Accordingly, the 50-point scenario became the base case, with an 80% chance of being realized. According to general forecasts, the number of employed people should increase by 200,000 in November. The unemployment rate is likely to remain unchanged at 3.7%. The annualized growth rate of average hourly earnings may slow to 4.5%. In my opinion, the dollar will get no support even if all components of the release come out at projected levels. At the same time, there is definitely an implication that the numbers may not reach the forecasts at all. The alarm bells have already rung on this subject: The day before yesterday, the ADP released a disappointing report which showed an increase of 127,000 new jobs in the non-farm payrolls, contrary to its forecast of 200,000. However, we have to admit that the ADP numbers do not always correlate with the official numbers, so there is still intrigue here. At the moment, it is advisable to take a wait-and-see attitude towards all dollar pairs, and EUR/USD is not an exception here. The Nonfarm data will probably not be able to change the situation: as mentioned before, the fundamental situation is not in favor of the dollar. Nevertheless, opening long positions ahead of such an important release is a very risky action. Taking into account the "Friday factor", it is an unreasonable risk, especially since the pair is in the area of 5-month highs.

USD/JPY: that's it, no movie! Federal Reserve Chairman Jerome Powell's dovish speech pulled down the dollar. Yesterday, the U.S. currency experienced a resounding sell-off on all fronts, but saw the biggest loss against the yen. A crushing blow from Powell At the middle of the week, Powell spoke about the economic outlook, inflation and US employment at the Brookings Institution. It was Powell's first public speech since the November FOMC meeting, so traders were looking forward to his comments on the central bank's future course. The market has been in a state of strong uncertainty. Softer inflation provoked speculations about a possible slowdown of tightening in the US, and recent hawkish comments made by Fed representatives have cast doubts on this. Until yesterday, dollar bulls had illusions about further sharp rate hikes in the US. However, Powell just shattered their hopes: the central bank intends to slow down. He said it makes sense to 'moderate' the pace at this stage to balance risks. He also hinted that the Fed might take less aggressive steps at its next meeting. After Powell's dovish rhetoric, the likelihood of a 50 bps rate hike in December rose from 69.9% to more than 90%. The sharp weakening of hawkish market expectations took a heavy toll on the dollar. It interrupted its 3-day climb and went into free-fall. Yesterday, the DXY index posted its biggest daily loss of the week, falling more than 1% from its major peers. Goodbye USD/JPY The U.S. currency showed the worst dynamics on Wednesday against the yen. The USD/JPY plummeted 1.2%, testing the 3-month low at 136.50 in one moment. A steep peak in yields on 10-year U.S. Treasuries contributed to the yen's sharp growth. The index fell to a one-month low of 3.6% after Powell's comments. "The dollar is losing more altitude as the market embraces a less hawkish than feared message from the Chair," said Rodrigo Catril, strategist at National Australia Bank Ltd. in Sydney. The "big decline in 10-year Treasury yields sees the yen at the top of the leaderboard." Recall that this year the Japanese currency suffered the most from the aggressive Fed rate, and the Bank of Japan's dovish policy adds more pressure on it. The BOJ is the only major central bank that has never raised interest rates this year. The hope that appeared last month that the Fed might soon slow down the pace of tightening helped the yen recover from its multi-year lows. The JPY showed the best uptrend against the dollar in November. It strengthened by more than 7%. This is the biggest monthly gain for the JPY in 14 years. Now, when Powell actually gave the signal to start a slowdown in interest rates in the U.S., many analysts have revised their forecasts for the pair - downward. According to experts, the asset has already exhausted its bullish potential and is unlikely to return to spectacular and confident growth in the near future. In the short term, the major will move mainly downwards, still weighed down by Powell's dovish statement. Also, US economic data may become a headwind for the dollar-yen pair. If the market sees another symptom of the approaching recession, it will finally convince traders that the US central bank will hit the brakes this month. Analysts predict this is likely to happen. The ISM manufacturing activity index for November will be released today. Economists are predicting that the index will fall from 50.2 to 49.8. Another headwind for the dollar will be the return of risk sentiment to the market due to the easing of anti-Covid measures in China. This should also favor USD/JPY bears.

Will gold fall for the Fed's entreaties? The external calm often hides internal tension. Despite gold's stabilization near $1,750 an ounce, we can't say the periods of turbulent XAUUSD quotes are far behind. The precious metal paused ahead of Federal Reserve Chairman Jerome Powell's speech and is trying to see if he can do what the other FOMC members failed to do. Can he use hawkish rhetoric to persuade stock indices to fall and the U.S. dollar to strengthen? Both are fundamentally important to gold. As a rule, when evaluating the prospects for XAUUSD, the dynamics of the USD index and Treasury bond yields are analyzed. The fall of the first of them below 106, according to DeCarley Trading, will contribute to the continuation of the peak to 98, raising the quotes of the precious metal significantly higher. Many factors have already been factored into the U.S. dollar, including a 5–5.25% federal funds rate ceiling and a shallow recession that the U.S. economy will plunge into in the second and fourth quarters of 2023, according to Barclays. Dynamics of gold and US dollar At the same time, capital flows also affect the value of gold. Queen Anne's Gate Capital says the current rally in XAUUSD is due to an outflow of money from the crypto market. In 2020, investors actively invested in ETFs and crypto assets. As a result, specialized exchange-traded funds grew from 80 million ounces to 110 million ounces. By now, they have fallen to 95 million ounces. Many are still under water, that is, in losses. They will take advantage of the rise in gold to close their positions. If ETFs shrink another 20 million ounces, the precious metal will plummet to $1,300. The collapse of cryptocurrency broker FTX accelerated the collapse of BTCUSD, and money poured into gold, but a stabilization of bitcoin will reverse that process. Gold and Bitcoin Dynamics However, if the capital outflow from specialized exchange-traded funds stops and the demand for physical assets in Asia starts to fall, the downward trend of XAUUSD can be considered broken not only technically but also fundamentally. The fact is that, in an upward trend, gold tends to flow from the East to the West and vice versa during downturns—from China and India to the USA and Europe. In this regard, a sharp drop in October imports of China's precious metal from Hong Kong to 18.7 tons, which is 45% less than in September, indicates a decrease in demand. However, Commerzbank believes that the dynamics of the indicator was affected by restrictions imposed by Beijing due to COVID-19. According to customs data from Switzerland, gold exports to China in October decreased slightly from 44 to 43.7 tons. In the near term, the fate of XAUUSD will be affected by Powell's speech and the U.S. labor market report for November. In technical terms, the 1-2-3 pattern can work out on the daily chart of the precious metal. However, for this, quotes must fall below $1,725, which will be a reason for selling. A fair price break of $1,762 per ounce is more likely to be a reason to buy.