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GBPUSD (1.2628): The GBPUSD currency pair has been trading somewhat flat after price action tested the resistance level of 1.2683. The sideways range formed between 1.2683 a 1.2491 is expected to remain in place. With the BoE meeting due today, we could, however, expect to see some volatility. A breakout from this range could potentially set up the directionin the next leg of the trend. A close above 1.2683 could likely confirm a short-term shift in the major downtrend while a break down below 1.2491 could signal a continuation to the downside.

EURUSD (1.1382): The EURUSD currency pair tested the highs of 1.1430 before giving up the gains. The declines in the common currency came as price action touched the previously established resistance level. Overall, the EURUSD remains caught trading in the range. The current declines could be seen retesting the falling trendline in the near term. If price posts a rebound off the falling trend line, we could anticipate a potential breakout from the resistance level if it is followed up by a rally. To the downside, the support at 1.1315 remains in place.

The FOMC held its meeting yesterday, and as widely expected, the Central Bank raised interest rates by another quarter point. This brought the Fed funds rate to 2.25% - 2.50%. As expected, the Central Bank forecast fewer rate hikes for the year ahead. Still, the U.S. Dollar managed to maintain the gains.

UK's consumer prices rose at a slower pace of 2.3% on the year ending November. This was in line with estimates and is down from the 2.4% registered the month before.

The core inflation rate rose 1.8% matching estimates and down from 1.9% previously. The decline in inflation came due to lower fuel prices.

Canada's inflation data was also out later in the day. Consumer prices fell 0.4% on the month matching estimates and reversed the 0.3% increase from the month before. The trimmed mean CPI is lower, rising only by 1.9% on an annualized basis compared to 2.1% previously registered.

Economic data from the U.S. saw existing home sales rebounding, rising 5.32 million on the month in November. This was slightly better than the forecasts of 5.20 million.

In the overnight session, New Zealand's quarterly GDP showed that the economy expanded by 0.3% in the third quarter of the year. This is well below estimates of a 0.6% increase that was the forecast.

It is another busy day for the markets. In the overnight session, Australia's monthly employment report came out. Earlier today, Australia's labor market data showed that the economy added 37k jobs during November. This beat forecasts of a 20k increase. October's data shows 28.7k jobs added. The Australian unemployment rate rose to 5.1% in November from 5.0% previously.

The Bank of Japan held its monetary policy meeting earlier today. The Central Bank left interest rates unchanged. The BoJ Governor Kuroda will speak shortly.

The European session will see the release of the UK's retail sales report. Retail sales can see an increase of 0.3%. This follow's October's decline of 0.5%.

The Bank of England will be holding its monetary policy meeting a few hours later. No changes are expected as the Central Bank is expected to maintain its interest rates steady at 0.75%. The NY trading session is somewhat quiet. The Philly Fed manufacturing index is due, followed by the weekly unemployment claims report.

Daily Pivots: (S1) 1.1280; (P) 1.1313; (R1) 1.1349; More...

Intraday bias in EUR/CHF remains on the upside as rebound from 1.1224 is in progress. Decisive break of 1.1356 resistance should confirm near term reversal. In that case, further rally should be seen back to 1.1501 resistance. On the downside, below 1.1288 will turn bias neutral first. But retreat should be combined well above 1.1224 low to bring another rally.

In the bigger picture, price actions from 1.2004 medium term top is seen as a correction only. Downside should be contained by support zone of 1.1198 (2016 high) and 61.8% retracement of 1.0629 to 1.2004 at 1.1154 to complete it and bring rebound. A break of 1.2 key resistance is still expected in the medium term long term. However, sustained break of the mentioned support zone will mark reversal of the long term trend. In that case, 1.0629 key support will be back into focus.

EUR/USD

Current level - 1.1381

After the test of 1.1440 the price failed to climb higher, which automatically paves the way back down to the support area of 1.1270.  First support is 1.1310 followed by 1.1270.

USD/JPY

Current level - 112.42

After a failed breakdown of the support area 112.20, the expectation remains for a second test at 112.20 and a bounce to 113.00 area. If the break of 113.00 is successful the new target would be around 113.60.

GBP/USD

Current level - 1.2622

The trend remains negative and for the bulls to take over they'll need a successful break of 1.2700 level. On the other hand, this could bring back the pair to the levels around 1.2500.

The USD rose after the Federal Reserve followed through its previous guidance and hiked interest rates. This was the fourth rate hike this year and the ninth one since 2015. In the statement, the bank pointed to two more rate hikes in the coming year, down from the three it had planned before. The dovish hike was a way for the bank to strike a balance between its previous guidance and the realities of the current state of the economy. Over the past few months, the US President has asked the Fed not to hike rates.

The yen strengthened slightly against the USD in the Asian session after the Bank of Japan (BOJ) made its interest rates decision. The bank left interest rates unchanged at minus 0.1%. The rates have remained in the negative territory since 2015. The decision showed a divergence between Europe, United States, and Japan. This is because the US has been raising rates and the ECB has announced that it will end the quantitative easing program.

The NZD/USD pair declined sharply in overnight trading after the Fed decision. The declines accelerated after New Zealand released the quarterly GDP numbers. The numbers showed that the economy expanded at an annualized rate of 2.6% which was lower than the consensus estimate of 2.8%. On a quarterly basis, the economy rose by 0.3%. The Australian dollar followed a similar trend despite better employment numbers. While the unemployment rate climbed to 5.1%, the participation rate rose to 65.7% while the full employment numbers rose by 37K.

EUR/USD

The EUR/USD pair declined sharply in overnight trading after the Fed decision. The pair reached a low of 1.1365 before moving slightly higher to 1.1390. On the hourly chart, the pair’s price is below the 14-day and 28-day EMA while the RSI has declined to 48. With the Fed turning dovish, there is a likelihood that the pair will resume the previous upward trend.

AUD/USD

The AUD/USD pair accelerated the decline started in the first week of December when it reached a high of 0.7395. The pair reached a low of 0.7085, which is the lowest level since October. On the four-hour chart, the price is below the 28-day and 14-day EMA and along the lower band of the Bollinger Bands. The RSI has moved to the oversold territory while the momentum indicator has moved to below 100. The pair will likely continue moving downwards.

NZD/USD

The NZD/USD pair declined sharply after the GDP numbers from New Zealand. The pair reached a low of 0.6730, which is below the short-term and longer-term moving averages on the four-hour chart. The momentum indicator has declined sharply below the 100 level while the Average Directional Index (ADX) remains at 28, which is lower than the December high of 63. There is a likelihood that the pair will continue the downward trend before finding a bottom.

Litecoin has moved back under the $30.00 level after finding strong technical resistance from the $31.50 level on Wednesday. Before correcting under the $30.00 handle, the LTCUSD pair had gained close to thirty per cent in market capitalization since opening the new trading week around the $24.40 level. The MACD indicator on the four-hour time is starting to correct lower, LTCUSD traders are likely to test intraday demand around the $27.90 level.

The LTCUSD pair is bullish while trading above the $27.90 level, key resistance is now found at the $30.00 and the $31.50 levels.

If the LTCUSD pair moves below the $27.90, sellers may test the $25.50 and $24.00 support levels.

The euro currency is starting to lose bullish momentum against the US dollar after another strong technical failure above the 1.1400 level. The EURUSD pair is coming under pressure after the Federal Reserve increased interest rates and committed to further gradual rate hikes next year. A strong move below the 1.1360 support level is now needed to accelerate technical selling in the EURUSD.

The EURUSD pair is only bullish while trading above the 1.1400 level, key technical resistance is found at 1.1430 and 1.1470 levels.

If the EURUSD pair trades below the 1.1360 level, key technical support is found at the 1.1330 and 1.1268 support levels.

The British pound is weakening towards the 1.2600 level against the US dollar after the Federal Reserve hiked interest rates on Wednesday. The GBPUSD pair is likely to come under further technical selling pressure if price slips below the 1.2600 support level. Overall, increasing interest rate differentials between the US and the UK and Brexit concerns are likely to weigh on sterling.

The GBPUSD pair is bullish while trading above the 1.2600 level, key resistance is found at the 1.2660 and 1.2700 levels.

If the GBPUSD pair moves below the 1.2600 level, key technical support is found at the 1.2550 and 1.2528 levels.

Exactly a year ago, the price of Bitcoin moved close to the $20,000 mark. Since then, the price has fallen by more than 80% and is currently trading at $3370. One of the most vocal traders who shorted the currency on the highs was former International Monetary Fund economist Michael Dow. In an interview with Bloomberg, he said that he had started to cover his short. He said:

I’m done. I don’t want to try to ride this thing to zero. I don’t want to try to squeeze more out of the lemon. I don’t want to think about it. It seemed like the right time… They just saw it was going up and wanted a piece of it. People’s imaginations can run further when they’re not tethered to facts, when they don’t understand the issue. It allowed the bubble to be much larger and much more violent. I saw the psychological hallmarks of it and there came a point where it looked like the fever was breaking.

The interview came as traders are saying that the price of Bitcoin has bottomed. Over the past five days, the price of Bitcoin has continued moving up, gaining more than 20% of its value. This has turned into a Santa rally of sort as the stock market continues to decline. In an interview, Mike McGlone, a Bloomberg Intelligence analyst, said that Bitcoin was cheaper compared to its moving averages. He also said that it was significantly oversold as shown in the daily chart below.

While this could be the case, the problems with Bitcoin continue to persist. The cost of mining has increased significantly and the mass adoption has not been successful. Therefore, with no solid fundamentals, and people’s confidence battered, it is likely that the currency will continue moving lower.