Daily F.X. Analysis, December 18 – Top Trade Setups In Forex - UK Inflation In Focus! 

On Wednesday, the market is all about the UK and Canadian inflation reports. Besides, the Eurozone Final CPI y/y will also play to drive market volatility. 

On Tuesday, in order to help the efforts of the European Central Bank in boosting inflation and job creation, the European Commission called on eurozone government to use fiscal policy and to invest in their economies.

EU executive told the governments should start the bank deposit insurance scheme and proposed a pan-EU unemployment reinsurance scheme. Brace for the news today.

Economic Calendar - UK Inflation In Focus 

BTC/USD - Daily Analysis

A day before, the BTC/USD fell sharply below the $7,040 support and sank to $6,800. As fresh as Nov. 22 and Nov. 27, $6,800 worked as support, so several traders had previously identified the price as the point where Bitcoin would arrive if the price drew back.

The BTC/USD has violated the triple bottom support level of 7,120. Closing of candles below this level is suggesting chances of further bearish bias, which can lead the leading cryptocurrency towards 6,850. 

On the higher side, the BTC/USD may face resistance around 7,115. 

The RSI and MACD are in a selling zone, suggesting chances of a bearish breakout.

BTC/USD - Daily Technical Levels

Support      Resistance 

7,201.3         7,304.03

7,146.6         7,352.06

7,043.87     7,454.79

Pivot Point 7,249.33

BTC/USD – Daily Forecast

The BTC/USD has violated the descending triangle pattern, which was supporting the pair around 6,865. The leading crypto pair is now gaining support around 6,865, along with a resistance level of 7,000. 

The RSI and MACD are in the selling zone, and the recent bearish Harami candle is suggesting strong bearish bias among investors. The bearish breakout of 6,865 can drive more selling until 6,685.

EUR/USD – German Ifo Business Climate 

The EUR/USD prices closed at 1.11487 after placing a high of 1.11745 and a low of 1.11291. Overall the movement of EUR/USD remained bullish that day.

On the data front, at 14:04 GMT, the Italian Trade Balance from Europe was published for October, which showed growth to 8.06B from the expected 2.82B and supported single currency Euro.

At 15:00 GMT, the Trade Balance for the whole area of the eurozone was published. The figure also came in favor of Euro currency as 24.5B against the expectations of 19.7B.

The jump in a trade surplus of Eurozone in October raised the demand for Euro against its counter currency US dollar, and hence EUR/USD surged on Tuesday.

On the other hand, to help the efforts of the European Central Bank in boosting inflation and job creation, the European Commission called on eurozone government to use fiscal policy and to invest in their economies.

EU executive told the governments should start the bank deposit insurance scheme and proposed a pan-EU unemployment reinsurance scheme.

According to the EU Commission, the ECB has maintained an accommodative monetary policy to increase inflation towards its target while supporting growth and job creation.

The commission suggested that countries should only increase their spending under EU budget rules, which has limited government borrowing. It was pointed mainly to Germany & Netherland, which have a large budget surplus and low public debts.

Commission also pointed out that Italy should focus on bringing public debts down, which are second-highest in Europe. The reason to bring the obligations down was given by commission as it was relatively high to its economy, and borrowing more to stimulate growth was not ideal.

The Vice President of EU Commission Valdis Dombrovskis said that “I invite countries with fiscal space to further boost investment and those with a high level of debt to bring it down.” The Commission is expecting a 1.2% growth in the upcoming two years against the 1.1% growth in the current year. The EUR/USD moved in bullish trend on Tuesday amid stronger Euro and relative weaker US dollar.

EUR/USD - Daily Technical Levels

Support Resistance 

1.1131 1.1137

1.1127 1.1139

1.1121 1.1145

Pivot Point 1.1133

EUR/USD – Daily Forecast

The EUR/USD seems to face a hard time breaking the 1.1160 resistance level due to a lack of trading volume in the market. The EUR/USD is likely to show choppy trading within a wide trading range of 1.1100 - 1.1160 today. Consider selling below 1.1160 and buying above 1.1100.

GBP/USD - Inflation Reports Ahead

The GBP/USD closed at 1.31291 after placing a high of 1.33359 and a low of 1.30991. Overall the pair GBP/USD moved in bearish trend throughout the day.

On Data front, the Average Earnings Index for October was released at 14:30 GMT, which showed a decline in average earnings of 3 months by 3.2% against the expectations of 3.4% and weighed on Sterling.

The Jobless Claims from the United Kingdom in November increased to 28.8K, while were expected as 21.2K. More than expected, unemployment change also weighed on Pound on Tuesday.

However, the British Unemployment Rate in October declined to 3.8% from expected 3.9% and supported Sterling. At 16:00 GMT, the CBI Industrial Order Expectations came in as unfavorable -28 against the expectations of -25 and weighed on Pound.

Weaker than expected macroeconomic data put Pound under pressure on Tuesday, and hence GBP/USD started to fell. 

On the other hand, the newly re-elected Prime Minister of UK Boris Johnson has laid out plans to fulfill his campaign promise of getting Brexit done in less than a week after victory in elections.

On Tuesday, the reports from PM’s office came that UK Parliament would hold its first vote on Johnson’s Brexit Deal as early as the upcoming Friday. The deadline for leaving the EU was given as 31st January 2020 by PM Johnson in his campaign, and holding votes in parliament on Friday would be the first step toward it.

The chances for winning votes for his Brexit deal in Parliament have increased now as he holds an 80-seat majority.

On Tuesday, PM Johnson also gave signals that he would keep another promise of not extending the Brexit transition period past 2020. He indicated that he would make his Brexit deal into law to eliminate the possibility of extending the transition period past 2020, which raised the bars that past that time, no-deal Brexit could be possible. It was not the first time that Johnson has threatened to leave the EU without a deal. However, the backdrop has changed this time because he has the majority now, and he is capable of following through.

The British Pound on this news dropped immediately in financial markets, and hence GBP/USD pair fell to 1.30 level on Tuesday.

GBP/USD - Daily Technical Levels

Support Resistance 

1.3267     1.3441

1.32         1.3548

1.3025    1.3722

Pivot Point 1.3374

GBP/USD – Daily Forecast

The GBP/USD is facing horizontal support around 1.3065, whereas the closing of candles above this level can drive buying in the GBP/USD. A bearish breakout of this level can open further room for selling until 1.2975. While failure to break below 1.3065 can lead the GBP/USD prices higher towards 1.3220.

All the best for today.