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US initial jobless claims fell -1k to 219k in the week ending December 21, slightly higher than expectation of 218k. Four-week moving average of initial claims rose 1k to 227k.

Continuing claims rose 46k to 1910k in the week ending December 14, highest since November 3, 2021. Four-week moving average of continuing claims rose 3k to 1881k.

Full US jobless claims release here.

Key Highlights

• Ethereum found support near $3,100 and corrected some losses.
• ETH traded below a key bullish trend line with support at $3,680 on the daily chart.
• Bitcoin price must settle above $100,000 to start a fresh increase.
• XRP could gain bullish momentum if it clears the $2.50 resistance.

Ethereum Technical Analysis

Ethereum declined heavily from $4,100 like Bitcoin. ETH traded below the $3,500 and $3,350 support levels before the bulls appeared near $3,100.

Looking at the daily chart, the price remained well above the 100-day simple moving average (red) and the 200-day simple moving average (green). A low was formed at $3,092 and the price recently started a recovery wave.

There was a move above the 23.6% Fib retracement level of the downward move from the $4,105 swing high to the $3,092 low. Immediate resistance is near the $3,600 level.

The 50% Fib retracement level of the downward move from the $4,105 swing high to the $3,092 low is also near $3,600. The next major resistance is near the $3,720 level. A daily close above the $3,720 resistance zone could start another steady increase.

In the stated case, the price may perhaps rise toward the $3,880 level. The next stop for the bulls may perhaps be to $4,000 or a new all-time high.

On the downside, Ethereum might find support near the $3,220 level. The next major support is $3,150, below which the price could slide toward $3,100. Any more losses might call for a move toward the $3,000 level.

Looking at Bitcoin, there was a steady increase above the $95,000 level, and the price might continue to rise toward the $105,000 level.

Economic Releases

• US Initial Jobless Claims - Forecast 218K, versus 220K previous.

• GBPUSD finds strong support in 1.2480 region
• But upside momentum struggles to take off

GBPUSD has managed to hold above the 1.2500 mark this week following last week’s post-Fed tumble that pulled the pair to the lowest since May, hitting 1.2474. The slide reinforced the medium-term downtrend line as a strong resistance wall, but now the bulls face additional barriers.

Any recovery attempt would first need to overcome the 61.8% Fibonacci retracement of the November-December upleg at 1.2610 and then battle the 20-day simple moving average (SMA) at 1.2663 before cracking the descending trendline.

However, a successful break above it would strengthen the short-term bullish bias, while switching the bearish outlook in the medium term to a more neutral one. It would also clear the path towards the December peak of 1.2810, which is where the 200-day SMA is currently converging.

In the bigger picture, the bulls would ideally need to aim for the 100-day SMA at 1.2943 as well for the long-term uptrend to stand any chance of being restored.

But given the weak positive momentum, further downside cannot be ruled out in the near term. The RSI is only slightly pointing upwards and remains below 50, while the stochastic oscillator has some way to go before reaching neutral levels.

Should the bears retake control, the 1.2480 support area is likely to be tested again before attention turns to the 1.2400 handle that lies slightly below the 123.6% Fibonacci extension.

To sum up, there is a greater possibility of GBPUSD resuming its medium-term downtrend than reviving its long-term uptrend over the next few sessions.

Forex trading is slowing down as the holidays approach, offering a pause after significant movements driven by various news events, including central bank decisions.

Notably, NZD/USD reached its lowest level since October 2022 at the end of last week.

The decline in NZD/USD has been influenced by two main factors:

1. The dollar gained momentum following the Federal Reserve's decision to lower the interest rate by 0.25% and its forward guidance for 2025.

2. According to Reuters:

→ New Zealand's economy contracted much more sharply than expected in the second and third quarters.

→ Market participants anticipate that the Reserve Bank of New Zealand may lower interest rates by 0.5% in February.

Technical analysis of the NZD/USD 4-hour chart depicts a bearish outlook:

• The 0.58 level, which served as support in November, turned into resistance in December.
• The price is currently hovering near the lower boundary of a descending channel that has been in place since October.
• The RSI indicator signals that the market is approaching oversold conditions.

While bears may attempt to extend the downtrend by pushing the price below last week’s low, this could create a divergence pattern on the RSI indicator, offering hope for a potential bullish reversal.

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The Australian dollar has posted slight losses on Tuesday. In the European session, AUD/USD is trading at 0.6247, down 0.18% at the time of writing.

RBA minutes hint at rate cut

The Reserve Bank of Australia minutes from the December meeting were significant although they didn’t have much impact on the Australian dollar. The minutes signaled that the RBA is increasingly confident that inflation is moving sustainably towards the Bank’s target range of 2% to 3%, but it was still early to conclude that the inflation battle had been won. Board members noted that the labor market remains tight and consumption has improved, factors which support the Bank maintaining rates.

At the December meeting, the RBA held the cash rate at 4.35% for the ninth consecutive time. The rate statement said that board members were more confident that inflation was declining and did not mention the possibility of a rate hike as it had in the previous meeting.

Will this guarded optimism translate into a rate cut in February? Let’s keep in mind Governor Bullock’s comment after the meeting, in which she said that the February rate decision would be data-dependent. The RBA would like to start the New Year with a rate cut, but it has been an outlier among the major central banks which are in the midst of an easing cycle. Bullock & Co. will be willing to press the rate trigger only if inflation moves lower as expected or key economic indicators such as job growth point lower.

In the US, data published on Tuesday indicated that durable goods orders and consumer confidence declined, but the Australian dollar couldn’t take advantage. The US economy is in solid shape and that has been reflected in the broad strength of the US dollar. Since October 1, the Australian dollar has plunged 9.8% against the greenback.

AUD/USD Technical

• AUD/USD is testing support at 0.6244. Below, there is support at 0.6224
• 0.6270 and 0.6290 are the next resistance lines

Despite the Federal Reserve's hawkish stance and the upcoming inauguration of Donald Trump, who has frequently discussed the possibility of new trade tariffs, EUR/USD and GBP/USD managed to find medium-term support last week. Both pairs are now attempting to recover toward recent highs.

GBP/USD

Last week, GBP/USD broke below the November low at 1.2480. However, the pair quickly rebounded above 1.2500, forming a bullish engulfing reversal pattern.

According to technical analysis, GBP/USD has the potential to rise further toward 1.2660–1.2730 if it can sustain levels above 1.2600. On the downside, a retest of 1.2470 could lead to a downward breakout, potentially driving the pair toward 1.2300–1.2400.

This week, trading GBP/USD requires consideration of the relatively empty economic calendar, with major investors staying out of the market. These factors could lead to sharp price swings and false breakouts.

Key Events Affecting GBP/USD Today:

• 15:30 (GMT+2): US Core Durable Goods Orders
• 17:00 (GMT+2): US New Home Sales
• 20:00 (GMT+2): Atlanta Fed GDPNow Indicator

EUR/USD

December has been challenging for EUR/USD buyers. Weak macroeconomic data and the ECB's rate cut have pushed the pair down to 1.0340. Late last week, the price briefly recovered above 1.0400 but dipped below this level again yesterday. Another test of 1.0330 may occur in the coming sessions. If this support level holds, EUR/USD could climb toward 1.0460–1.0520.

According to technical analysis, EUR/USD shows signs of a potential upward correction, provided the price can stabilise above 1.0450. On the daily chart, there is an inverted hammer pattern. Also, there is a possibility of a double bottom formation. A drop below 1.0330, however, would invalidate these patterns.

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It’s never too late to believe in Santa. Investors on Monday were shrugging off the bad news of past week – especially the one that suggested that the Federal Reserve (Fed) would cut its rates only two times in 2025 due to a too resilient US economy. Yesterday’s data that showed that the US durable goods orders fell more than expected in November, the new home sales rebounded slightly less than expected and the consumer confidence unexpectedly dropped in December. This bag of bad news helped tempering the latest hawkish shift in Fed expectations. As such, the buyers are out and buying. The S&P500 rebounded 0.73%, Nasdaq 100 rallied more than 1% and even the European Stoxx 600 eked out a small gain, as Novo Nordisk in Denmark jumped more than 5.5% as investors rushed in to buy a dip on bet that the weight loss drugs are here to stay.

Other than that, the technology stocks kicked off the week in a great shape. Nvidia rallied nearly 3.70%, Apple advanced toward fresh highs, while the Magnificent 7 stocks – together – gained around 1.50%. The small caps however were left behind, with the Russell 2000 index sliding 0.22%. The concentration is back on the menu this year-end – perhaps as the higher yields drive capital toward the big cap companies that are less pressured by higher borrowing costs than their small and mid-cap peers.

Even though the equity markets looked joyful on Monday, the US 2-year papers remained offered and the US dollar erased earlier losses to finish the session higher against most majors. The EURUSD couldn’t hold on to gains above the 1.04 and slipped below this level on expectation that the morose European growth and political shenanigans demand a decent help from the European Central Bank (ECB) next year. In France, Macron placed French politics’ heavy weights in his newly formed government, but even the hefty names will hardly convince its divided government to agree on a budget deal that aims to narrow the French budget deficit. Across the Channel, Cable remained under pressure as softer-than-expected Q3 growth reinforced the 'pain before gain' narrative and boosted appetite for a more supportive Bank of England (BoE) policy while waiting for government spending to show up in the numbers. The EURGBP however remained offered near the 50-DMA and remains set for a further slide toward the 82 cents mark on the diverging ECB and BoE outlooks, where ECB expectations are sensibly softer than the BoE’s. In Japan, the USDJPY is back testing the 157 offers and could easily extend gains toward the 160 mark.

Meagre news and data flow should keep the focus on a more hawkish Fed. The pullbacks in the US dollar are probably good opportunities to buy the dips against most majors. As per equities, the rally extends but the questions regarding the ballooning valuations of Big Tech stocks become louder, too. Two stellar years of more than 20% gains for the S&P500 definitely calls for correction. But no one is willing to leave the festive table, just yet.

Key Highlights

• AUD/USD declined heavily below the 0.6380 and 0.6350 support levels.
• A major bearish trend line is forming with resistance near 0.6280 on the 4-hour chart.
• EUR/USD is consolidating below the 1.0450 resistance zone.
• Gold is attempting to recover above the $2,620 pivot level.

AUD/USD Technical Analysis

The Aussie Dollar started a major decline from well above 0.6500 against the US Dollar. AUD/USD traded below the 0.6450 support to enter a bearish zone.

Looking at the 4-hour chart, the pair gained bearish momentum below 0.6350, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour). Finally, it tested the 0.6200 support zone.

A low was formed at 0.6199 and the pair is now consolidating losses. On the upside, the pair could face resistance near the 0.6280 level. There is also a key bearish trend line forming with resistance near 0.6280 on the same chart.

The trend line is close to the 50% Fib retracement level of the downward move from the 0.6377 swing high to the 0.6199 low. The next major resistance is near the 0.6335 level.

A close above the 0.6335 level could set the tone for another increase. In the stated case, the pair could rise toward the 0.6380 resistance. On the downside, immediate support sits near the 0.6220 level.

The next key support sits near the 0.6200 level. Any more losses could send the pair toward the 0.6180 level. Any more losses might send the pair toward the 0.6150 level.

Looking at Gold, the price is attempting a recovery wave, but the bears might remain active near the $2,640 and $2,650 levels.

Upcoming Economic Events:

• US New Home Sales for Nov 2024 (MoM) – Forecast +0.2% versus -17.3% previous.