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The US dollar is falling against a basket of major currencies. Yesterday, the dollar index (#DX) moved away from local highs and closed in the negative zone (-0.26%). Investors took a wait-and-see attitude before the Fed's decision on the interest rate. The Fed meeting will start today and last two days. The regulator is expected to raise the base interest rate by 0.25 percentage points to 2.25-2.50% per annum. Investors will carefully assess the comments by representatives of the regulator regarding the further monetary policy tightening.

The euro strengthened against the US currency despite weak economic data. The consumer price index in the Eurozone counted to 1.9% (year on year) in November and was worse than the expected value of 2.0%. The euro was supported by news that Italy reached an agreement with the EU on a new budget project for 2019. Italian Prime Minister, Giuseppe Conte, reported that the government would reduce the budget deficit target for 2019 to 2.04% of GDP instead of 2.4% of GDP.

The "black gold" prices are falling. At the moment, futures for the WTI crude oil are testing the mark of $49.25 per barrel.

Market Indicators

• Yesterday, aggressive sales were observed in the US stock market: #SPY (-1.96%), #DIA (-2.07%), #QQQ (-2.27%).
• The 10-year US government bonds yield is at the level of 2.83-2.84%.

The news feed on 18.12.2018:

• German IFO business climate index at 11:00 (GMT+2:00);
• Statistics on the real estate market in the US at 15:30 (GMT+2:00).

The BRENT.CMD/USD pair has been trading in a symmetric triangle pattern since the end of November. The commodity tested the upper boundary of the triangle pattern on December 7.

As shown on the chart, a breakout occurred through the bottom border of the pattern during the Asian trading session on Tuesday.

Given that a breakout had occurred, it is likely that the UK's crude oil price will continue to edge lower within this session.

The potential downside target for the commodity price will be near the weekly S3 at 56.03.

The light crude oil has been depreciating since the beginning of October after the commodity made a U-turn south from the upper boundary of a descending channel pattern at 76.85 on October 3.

A breakout occurred through the lower boundary of a triangle-like formation pattern at 50.59 during the end of yesterday's trading session.

As for the near future, the LIGHT.CMD/USD crude oil price is likely to continue its southern movement during the following trading sessions.

The potential downside targets will be near the bottom border of the channel pattern at 44.90.

Germany Ifo Business Climate dropped for the fourth straight month to 101.0 in December, down fro 102.0 and missed expectation of 101.7. Current Assessment gauge dropped to 104.5, down from 105.5 and missed expectation of 104.9. Expectations gauge dropped to 97.3, down from 98.7 and missed consensus of 98.2.

Ifo President Clemens Fuest noted in the release that "concern is growing among German businesses". And, "the German economy faces a lean festive season." Ifo economist Klaus Wohlrabe said uncertainty had increased again and Brexit was at the top of the agenda. The German economy is cooling but there is no recession in sight.

Full release here.

Cable ticked higher in early European trading on Tuesday and probes above key barrier provided by falling 10SMA (1.2641), which limits upside attempts since 13 Nov and maintains bearish short-term bias.

Fresh near-term bullish sentiment is supported by expectations that Fed would dovish on Wednesday’s policy meeting, amid concerns about global growth slowdown, as well as strong criticism from President Trump about the pace of rate hikes.

Close above 10SMA would generate initial bullish signal, while extension and close above 20SMA would provide relief.

On the other side, growing bearish momentum on daily chart warns that recovery may stall under next key points at 1.2686 (13 Dec high, where recovery from new 20-month low at 1.2476 stalled) and 1.2711 (falling 20SMA).

Return and close below 10SMA would weaken near-term tone and keep overall bears intact.

Res: 1.2662, 1.2686, 1.2711, 1.2782
Sup: 1.2609, 1.2564, 1.2528, 1.2476

The Euro maintains positive tone in early Tuesday’s trading and probes above converged 10;20;30SMA’s and Monday’s high at 1.1354/58 zone.

Bullish near-term bias on strong downside rejection last Friday (triple-bottom is forming at 1.1270 zone) is also supported by expectations for dovish tone from Fed on Wednesday.

Fresh bulls are lacking momentum and may struggle at strong barriers at 1.1388 (base of thick daily cloud) and 1.1401 (falling 55SMA).

Daily cloud marks strong resistance which already capped recovery attempts and sustained break here would generate bullish signal for test of next key barrier at 1.1444 (Fibo 38.2% of 1.1815/1.1215 / 10 Dec spike high).

Scenario could be supported by softer tone from the Fed (the US central bank already signaled slowing the pace of rate hikes in 2019), with reversal signal to be generated on close above 1.1444 pivot.

Conversely, repeated rejection under daily cloud would risk fresh weakness and keep the downside vulnerable.

Key support lays at 1.1270 zone (lows of 15/28 Nov, 14 Dec) and sustained break here would generate bearish signal.

German Ifo data is the key event in the European session today. German business climate is expected to slow (101.8 f/c vs 102 prev) and could add to negative near-term signals on weaker than expected release.

Res: 1.1376, 1.1388, 1.1401, 1.1444
Sup: 1.1354, 1.1336, 1.1298, 1.1270

Pivot (invalidation): 112.85

Our preference Short positions below 112.85 with targets at 112.35 & 112.00 in extension.

Alternative scenario Above 112.85 look for further upside with 113.05 & 113.25 as targets.

Comment The RSI has broken down its 30 level.

Pivot (invalidation): 1.2590

Our preference Long positions above 1.2590 with targets at 1.2645 & 1.2685 in extension.

Alternative scenario Below 1.2590 look for further downside with 1.2560 & 1.2530 as targets.

Comment The RSI is bullish and calls for further upside.

Pivot (invalidation): 1.1330

Our preference Long positions above 1.1330 with targets at 1.1360 & 1.1390 in extension.

Alternative scenario Below 1.1330 look for further downside with 1.1310 & 1.1285 as targets.

Comment Technically the RSI is above its neutrality area at 50.

Pivot (invalidation): 0.9950

Our preference Short positions below 0.9950 with targets at 0.9910 & 0.9880 in extension.

Alternative scenario Above 0.9950 look for further upside with 0.9965 & 0.9985 as targets.

Comment The RSI advocates for further decline.