Daily Market Analysis from ForexMart

The Fed remains cautious despite expectations of a rate cut

The head of the Federal Reserve System, Jerome Powell, in his recent comments stressed that the strong US economy gives the central bank the opportunity to be cautious about changes in interest rates. According to Powell, the economy is in good condition, and there is no reason to expect changes in this direction.

At the same time, despite the reduction in interest rates by the Fed, the cost of borrowing for citizens has not changed significantly. This is because rates on most loans, such as mortgages and credit cards, depend on the yield of 10-year U.S. bonds, which have recently reached high levels despite efforts to reduce inflation.

Powell noted that the current economic situation leaves many uncertainties, including in light of possible changes in the trade policy of the new administration of President Donald Trump. He also expressed hope for constructive relations with the new Government.

The issue of the Fed's independence also remains relevant. Some of Trump's economic advisers have suggested giving the president more influence over the regulator's decisions, although many experts emphasize the importance of the central bank's independence for the stability of the economy and the US dollar.
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EUR/USD Weekly Preview: CPI, PPI, ECB

In two weeks, the currency market will de facto go on a Christmas/New Year vacation, which will not end until early January. But before leaving, traders will "slam the door loudly," reacting to the key events of December.

The upcoming week is packed with significant events for the EUR/USD pair. Key November inflation data will be released in the US, and the European Central Bank will hold its final meeting of the year in Frankfurt.

Monday-Tuesday
On Monday, traders will focus on China's November inflation report. With an otherwise empty economic calendar, this release could significantly influence USD pairs, but only if the results deviate from forecasts.

In October, China's Consumer Price Index (CPI) fell to 0.3% (forecast: 0.4%). The indicator shows a downward trend for the second month, reflecting weakening consumer demand. November's CPI is expected to rebound to 0.4%. If inflation unexpectedly slows further, the USD might gain indirect support due to heightened risk-off sentiment.

Wholesale inventory data will be published later during the US session, though it's a secondary macroeconomic indicator unlikely to significantly impact EUR/USD.

On Tuesday, the US will release the labor cost index, measuring the annual change in employer expenses per employee (this considers not only salary deductions but also taxes and payments to other funds). This lagging indicator could influence the USD only if it diverges significantly from expectations. The index is forecasted to decrease to 1.3% in Q3, following drops to 1.9% in Q2 and 2.4% in Q1.

Wednesday
Wednesday brings the week's most crucial macroeconomic report: the November US Consumer Price Index (CPI). Given recent Federal Reserve statements, this report could determine the outcome of the Fed's January meeting and possibly the December one.

For instance, Fed Governor Christopher Waller has indicated support for pausing the easing cycle if the data contradict forecasts of slowing inflation—that is, if the CPI and PPI accelerate again. At the same time, Waller spoke about the pause not hypothetically but in the context of the December meeting.

Similarly, San Francisco Fed President Mary Daly suggested that rate hikes might resume if inflation accelerates. For the most part, the rest of the members of the U.S. central bank called for a slowdown in the pace of policy easing but did not rule out "other scenarios." Among them is Jerome Powell, who has also recently toughened his rhetoric.

In other words, the CPI is significant in current circumstances.

According to forecasts, Headline CPI is expected to rise to 2.7% YoY (up from 2.6% in October). If realized, it could signal a reversal in the six-month downward trend seen through September. In October, the Headline CPI unexpectedly increased, and if it comes out at least at the forecast level (not to mention the "green zone") in November, then we can already talk about a certain trend, which will not please the Fed representatives.

The Core CPI is expected to remain at 3.3% YoY. The indicator was at the same level in October and September. The stagnation of the core CPI adds to Fed concerns amid rising overall inflation.

Thursday
Thursday is another critical day for EUR/USD, with the ECB's final meeting of the year taking center stage during the European session. The base-case scenario suggests a 25-basis-point rate cut. Additionally, the ECB will release its quarterly projections on rates and macroeconomic indicators. After the latest data on the growth of the European economy and inflation in the eurozone, the 50-point scenario is not even hypothetically considered. Therefore, reducing the rate by 25 points will not substantially impact the euro and, consequently, on EUR/USD. Traders are interested in further prospects for easing the monetary policy. Therefore, the market's main attention will be focused on the main points of the accompanying statement and the rhetoric of Christine Lagarde.

Recent Eurozone data shows that Q3 GDP growth reached 0.4% QoQ (forecast: 0.2%), the strongest growth rate since the beginning of the year before last. On an annual basis, GDP increased by 0.9% (forecast: 0.8%), the strongest growth rate since the first quarter of 2023.

As for inflation, Headline CPI rose to 2.0% (forecast: 1.9%), and the core remained at the previous month's level, 2.7%, with a forecast of a decrease of 2.6%. Inflation of service prices (one of the report's most important components, which is closely monitored by the ECB) remained at a high level—3.9%.

These figures suggest that the ECB will continue easing monetary policy moderately. During the post-meeting statement, Lagarde is expected to emphasize a data-dependent approach.

The Producer Price Index (PPI) will be released in the US session, another vital inflation indicator alongside CPI. The Producer Price Index (PPI) will be released in the US session, another vital inflation indicator alongside CPI. Forecasts suggest that the headline PPI is expected to accelerate to 2.5% YoY, while the core PPI is expected to rise to 3.2% YoY. A stronger PPI print could support the USD, especially if CPI also meets or exceeds forecasts (not to mention the "green zone").

Friday
Eurozone industrial production data will be published on Friday. In monthly terms, the indicator should show positive dynamics, but it will remain in the negative area (-0.1% in October against -2.0% in September). In annual terms, the indicator should fall to -3.0% after falling to -2.8%.

The Import Prices Index will be released in the US session. Though secondary, it provides additional context for inflation trends. Forecasts indicate a rise to 1.0% YoY in November (up from 0.8% in October and -0.1% in September).

Conclusions
The spotlight will be on US inflation reports (CPI and PPI) and the ECB meeting. Accelerating US inflation would boost USD demand since, in this case, traders will "remember everything": Mary Daly's hawkish statements, strong Nonfarms, and pro-inflationary policies under the incoming Trump administration.

Meanwhile, the ECB's dovish tone amid rising Eurozone inflation could weigh on the euro.

Short positions on EUR/USD become relevant if the pair breaks below the 1.0530 support level (the middle Bollinger Band and Tenkan-sen line on D1). The first target is 1.0470 (the lower line of Bollinger Bands, coinciding with the lower border of the Kumo cloud on H4), and the second target is 1.0420 (the lower line of Bollinger Bands on D1).
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The main events by the morning: December 17

The European Union has imposed the 15th package of sanctions against Russia. The construction giant PIK and the airline UTair, as well as the head of Avtodor Vyacheslav Petushenko, were subject to restrictions. The sanctions affected 52 tankers carrying Russian oil, top managers of fuel and energy sector companies and heads of Gazprom subsidiaries: Gazprom Fleet, Gazstroyprom and Gazprom LNG Technologies.

The Moscow Stock Exchange index fell to a one-year low, reaching 2,395 points. The market is reacting negatively to the speeches of the president and the Minister of Defense, new sanctions and the expectation of a decision on the key rate. Rostelecom's shares have fallen to the lowest value since 2022 – 50 rubles. The collapse of MTS Bank continues, whose securities have lost 60% since the IPO. The largest drop was demonstrated by «Samolet» – since the beginning of the year, the company's shares have depreciated by 79%, falling from 3,851 to 845 rubles per paper.

Donald Trump has announced plans to impose or increase tariffs against a number of countries. At a press conference at the Mar-a-Lago estate, the president-elect stressed that the United States will be guided by the principle of reciprocity: if a trading partner imposes duties on American goods, the United States will impose similar measures in response. The list of countries potentially subject to new duties may include Brazil, India and China.

US Senator Bernie Sanders criticized the US defense budget, which reached almost $900 billion. According to him, inflated defense spending limits funding for health and social care programs. Sanders also spoke about large-scale fraudulent schemes at the Pentagon, where defense companies overestimate the value of contracts by 40%.

South Korea has imposed sanctions against 7 individuals and 13 organizations from Russia. The reason was the accusation of illegal military cooperation with the DPRK. In total, 11 people and 15 organizations were included in the list, including two generals of the Korean People's Army, a rocket engineer and one officer.
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The main events by the morning: December 18

Gazprom's shares have collapsed to their lowest level since 2009. Gazprom's securities continued to fall for the fourth day in a row, reaching 107 rubles per share. This is a record low for the last 14 years. The main reason was the EU's rejection of interest in the transit of Russian gas through Ukraine and the transition to alternative energy sources, which caused a negative reaction from European gas companies.

Elon Musk is under the gun of the US authorities. SpaceX and its founder Elon Musk have been under scrutiny by the American authorities. According to The New York Times, Musk is suspected of possible violations related to the secrecy of state secrets.

Silver will be the main asset of 2025. Experts at Heraeus Precious Metals predict an increase in the value of silver on the global market in the range of $28 to $40 per troy ounce in 2025. Silver is expected to rise in price faster than gold, which makes it a promising investment asset.

The cost of bitcoin has updated another historical high, exceeding $ 108 thousand. Crypto investors continue to buy, expecting that the newly elected US President Donald Trump will create more favorable conditions for the crypto industry and include bitcoin in the US strategic reserve.

South Korean President Yoon Suk Yeol ignores the investigation. He did not appear for questioning at the Office of Anti-Corruption Investigations in the case of the rebellion. Yeltsin's powers were suspended as a result of impeachment in parliament.
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EUR/USD: Powell arranges sell-off. EUR plunges to 2-year low. Parity on horizon?

The EUR/USD pair plunged to 1.0351 with a single-session fall of 1.32%. The instrument recorded its lowest close in two years. This slump was triggered by unexpectedly hawkish statements from the Federal Reserve, which made it clear that no rate cuts are anticipated in January.

According to the updated FOMC forecasts, only two rate cuts are expected in 2025, significantly fewer than previous estimates. This adjustment in expectations led investors to reassess their positions. As a result, this entailed a sharp drop in stock indices, a rise in US Treasury yields, and, consequently, a strengthening of the dollar.

Despite being just six days before Christmas, markets faced another unpleasant surprise. Under the influence of the Fed's hawkish statement, the S&P 500 index tumbled by 2.95%, marking its steepest post-meeting decline since 2001.

The reaction also extended to the debt market. Higher yields on US Treasuries compared to other countries provide investors with an additional incentive to invest in the US. The yield on benchmark 10-year Treasury bills jumped by 11.5 basis points, surpassing 4.5% for the first time since May. In comparison, the yield on 10-year German bonds is only about 2.29%.

According to strategists, the Fed's intention to moderate the pace of rate cuts is bearish for the US dollar due to the widening short-term interest rate differentials with the eurozone.

Analysts are closely monitoring changes in the FOMC's dot plots, which reflect individual committee members' expectations for future interest rates. The latest snapshot indicates a cumulative rate cut of 50 basis points in 2025 (two steps of 25 bps each), twice lower than the 100 bps forecasted in September and below the 75 bps expected by market consensus before the update was released.

The revised forecasts reinforced the outlook for a higher funds rate, with the long-term median dot now projected at 3.0%. This suggests that the current rate-cutting cycle will end at a higher level than previously anticipated.

At the same time, economic forecasts were revised upwards: the annual inflation rate for 2025 is now expected at 2.5%, up from the earlier estimated 2.1% increase. Most FOMC members believe core inflation will continue to decline in 2025.

Jerome Powell noted that the latest rate cut was a difficult decision and confirmed the Fed's intention to slow the pace of monetary policy easing. He emphasized that before any further rate cuts, the central bank expects clearer progress in reducing inflationary pressures and will not tolerate inflation persistently above the 2% target.

As a result, markets are revising their expectations, preparing for a prolonged pause in the Fed's easing cycle. This scenario could keep the US dollar elevated through 2025, further pressuring the euro. Could parity be on the horizon?

Temporary rebound in EUR/USD

During Thursday's European session, the EUR/USD pair managed to climb back above the 1.0400 level, as the bullish momentum of the US dollar slightly weakened following Wednesday's sharp rally.

However, fundamental signals still do not provide a basis for a shift in the overall negative trend. Both short-term and long-term exponential moving averages (EMAs) reveal the bearish trend.

The 14-day Relative Strength Index (RSI) broke below the lower border of the bearish range at 20.00 to 40.00, signaling the formation of a new downtrend.

From a technical viewpoint, the key support level for the EUR/USD pair could be 1.0200, provided it breaks below the two-year low at 1.0330.

In the case of an upward correction, the nearest significant obstacle for bulls would be around the 1.0500 zone, where the 20-day EMA is recognized.
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The main events by the morning: December 20

There is a new crisis in the United States: the government is on the verge of a shutdown due to the failure of the funding bill. Republicans proposed a document that was supported by only 174 members of the House of Representatives, while 235 opposed it. If the bill had been approved, the federal government would have received funds to work until March 2025, and the debt ceiling would have been suspended until January 2027.

The International Monetary Fund believes that the Russian economy is growing due to the rapid growth of wages. The Director of Communications of the foundation noted that the growth of the Russian economy is due to strong private consumption, supported by a tough labor market and rapid wage growth. Corporate investments also play an important role.

Sanctions against Russia have led to an increase in business tourism. Already, almost 20% of business trips are to foreign destinations, the leaders among which are China and the UAE. Next year, the number of business trips may increase by another 15-20%. This is due to the desire of businesses to explore new areas for doing business within the Russian Federation or in friendly countries.

Donald Trump has threatened the EU countries that they must fill the trade deficit with the United States through purchases of oil and gas. Otherwise, the United States will impose widespread tariffs.

Bitcoin fell below $95,000 after the decision of the US Federal Reserve System to put the key rate cut on pause. The Fed also raised its inflation forecast for next year. Experts believe that the head of the regulator, Jerome Powell, may become a new villain for the crypto industry, replacing the head of the SEC, Gensler.

Thailand is considering the possibility of legalizing bitcoin as a means of payment. The country's finance minister proposed starting an experiment in tourist regions such as Phuket and Hua Hin, where it would be possible to allow the use of cryptocurrency in restaurants, cafes and shops. This will simplify the lives of tourists who will be able to pay with digital assets without having to look for currency exchange offices.
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Inflation falls to 2.4%: Markets respond with gains, but week remains a loss

US stocks rally after weak trading
After two straight losing sessions, US stocks ended the week on a positive note, as encouraging inflation data and comments from Federal Reserve officials eased investor concerns about future interest rate moves.

Inflation is slowing: Key data
The published Personal Consumer Expenditure (PCE) index, one of the main indicators of inflation, showed an increase of 2.4% year-on-year in November. This figure was slightly lower than economists' forecast of 2.5%. This result strengthened hopes that inflationary pressures continue to subside despite the resilience of the economy.

Consumers continue to spend
Consumer spending data showed an increase in November, which was further evidence of the resilience of the US economy. This fact, despite subdued inflation, supports confidence that demand remains stable.

Rate expectations are shifting
The publication of fresh data led to a change in market sentiment. Now traders are forecasting the first cut in the Fed's key rate in March 2025, and the second in October of the same year. Previously, the probability of a second cut before the end of 2025 was estimated at only 50%.

At the same time, on Wednesday, the Fed announced a third rate cut this year. However, according to the updated economic forecasts (SEP), the Fed expects only two rate cuts of 25 basis points in 2025, instead of the four announced earlier in September. This more conservative approach reflects the continued resilience of the economy and the difficult situation with inflation.

Market reaction: sell-offs and recovery
The Fed's announcement triggered a wave of selling on Wednesday evening, from which the market was unable to recover even on Thursday. However, Friday's rally partially offset the losses. Despite this, the main US stock indexes - the Dow Jones, S&P 500 and Nasdaq - showed an overall decline for the week.

The role of fiscal policy
Uncertainty about fiscal policy, including the possible impact of tariffs, also received attention from Fed officials. Some of them acknowledged that they have begun to factor these risks into their forecasts. Such an approach may influence the regulator's further actions, adding another factor to the equation of economic stability.

Market Correction: Experts Say
"It's pretty obvious what's happening — it's just that this PCE plus the dovish comments from the Fed have offset the market's overreaction to the hawkish cut that everyone was expecting," said Jay Hatfield, CEO of Infrastructure Capital Advisors in New York.

He added: "We've seen this about 10 times during this Fed cycle. The market just always overreacts to one side or the other."

Key Indexes Are Gaining
The Dow Jones Industrial Average (.DJI) added 498.82 points, or 1.18%, to 42,841.06. The S&P 500 (.SPX) rose 63.82 points, or 1.09%, to 5,930.90. The Nasdaq Composite (.IXIC) added 199.83 points, or 1.03%, to close at 19,572.60.

The Dow and S&P both saw their biggest gains in a single day since Nov. 6.

A Week of Controversy
However, all three major indexes ended the week lower overall. The S&P 500 lost 1.99%, the Nasdaq lost 1.78%, and the Dow fell 2.25%. The Nasdaq ended a four-week winning streak, while the S&P 500 posted its biggest weekly loss in six weeks. The Dow also fell for a third straight week.

Sectors on the Rise
Despite the weekly decline, all 11 major S&P sectors posted gains on Friday. Real estate (.SPLRCR) led the way, rising 1.8% as Treasury yields fell. The broad rally showed investors are willing to return to active buying despite recent wobbles.

Small-caps: New prospects
Small-cap stocks tracked by the Russell 2000 (.RUT) rose 0.9%. These assets often benefit from a lower interest rate environment, making them an attractive choice for investors in the current environment.

Congress Averts Crisis
Investors were closely watching developments in the U.S. Congress on Friday, which took steps to prevent a partial federal government shutdown. House Republican leaders said they would vote to keep the government open, adding stability to the market.

Broad Gains in Stocks
Advance stocks outnumbered decliners 2.84-to-1 on the New York Stock Exchange on Friday, while the Nasdaq outnumbered decliners 2.12-to-1. The S&P 500 posted three new 52-week highs and 23 new lows, while the Nasdaq posted 51 new highs and 233 new lows.

Triple Witchcraft and Volume Boost
Friday's session was made special by the simultaneous expiration of quarterly equity, index option, and futures derivatives contracts, known as the "triple witchcraft." This event significantly boosted trading volume, which totaled 21.58 billion shares, well above the 14.87 billion average over the past 20 trading days.

December's Challenges: Looking Ahead
December has so far disappointed investors, turning out to be one of the most challenging months for the market in an otherwise strong 2024. The S&P 500 has gained 24% year-to-date, but continues to struggle. Traditionally, the last five trading days of December and the first two days of January, known as the "Santa Claus Rally," average gains of 1.3%. However, this year could see a departure from that trend.

Fed Disappointment, Sectors in the Red
The S&P 500 suffered its biggest daily drop since August on Wednesday after the Fed disappointed investors by offering a less aggressive rate cut for 2025. There are also problems beneath the surface, with eight of the 11 S&P 500 sectors in the red in December and the S&P 500 down 7%.

Rising Bond Yields and Overvalued Stocks
Another source of tension in the market is rising Treasury yields. The 10-year yield rose to 4.55%, the highest in six months. Matt Maley, chief market strategist at Miller Tabak, said the rise is putting pressure on stocks, especially with the S&P 500 trading at 21.6 times projected earnings, well above the historical average of 15.8.

Santa Claus Rally: Hopes and Reality
The Santa Claus Rally period, which covers the last five trading days of the year and the first two Januarys, traditionally brings gains to the market. Historical data shows that 90% of such periods have predicted a positive outcome for the year. However, in 2024, experts like Carlson suggest that the main gains have already occurred in November, when the market gained 5.7% amid political events.

Market Narrowing: A Warning Sign
A narrowing rally, with fewer stocks gaining, is also a cause for concern. It could mean the market is becoming less resilient, which in turn dampens investors' holiday spirits.

Tech Giants Show Strength
Some mega-cap companies continue to delight investors. Tesla (TSLA.O) and Alphabet (GOOGL.O) have shown impressive results, rising 22% and more than 13%, respectively, in December. Broadcom (AVGO.O) was another winner, with shares soaring 36% on expected strong demand for its AI chips, pushing the company's market value above $1 trillion.

Trouble Below the Surface
But such gains are becoming increasingly rare. The number of S&P 500 stocks that are falling has outnumbered those that are advancing for 13 straight sessions, the longest losing streak since 2012.

In addition, the percentage of S&P 500 stocks trading above their 200-day moving averages has fallen to 56%, the lowest in a year, according to data from Adam Turnquist of LPL Financial.

Analysts Take a Cautious Approach
"We recommend waiting for support to establish and momentum to improve before intensifying dip-buying," Turnquist wrote in a research note issued after a significant sell-off in the market on Wednesday.
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Dollar Extinguishes All Candles

The brief rally for the EUR/USD currency pair didn't last long. A slowdown in the Personal Consumption Expenditures (PCE) index—an inflation gauge preferred by the Federal Reserve—to 0.1% month-over-month in November, along with statements from FOMC officials indicating that monetary easing would continue into 2025, seemed to trigger a corrective response for the main currency pair. However, comments from Donald Trump on social media and emerging vulnerabilities in the euro brought the situation back to square one.

The president-elect of the United States does not intend to spare anyone. He initially focused on Mexico, Canada, and China. Then, he turned his attention to BRICS countries. However, he didn't stop there; he announced that if the European Union did not increase its purchases of oil and gas from the U.S., he would impose tariffs on European imports. This decision put additional pressure on the euro, as such tariffs could further slow down an already fragile European economy.

Recent forecasts from Bloomberg experts indicate that the eurozone's GDP is expected to grow by 1% in 2025, a decrease from the previously anticipated 1.2%. In 2026, growth is projected to be 1.2%, lower than the earlier estimate of 1.4%. These revised estimates are below the European Central Bank's projections, which further emphasize the vulnerability of the euro area.

Eurozone Economic Trends and Forecasts

Germany, once considered the growth engine of Europe, is now causing further economic decline. Analysts forecast that its economy will expand by only 0.4% next year, followed by a 1% growth the year after that.

In contrast, the U.S. economy appears to be performing well. The Atlanta Fed's leading indicator suggests a GDP growth of 3.1% in the fourth quarter. Futures markets show a 91% probability that the Fed will pause its monetary easing cycle in January. Meanwhile, the ECB intends to continue reducing interest rates. Christine Lagarde has stated that the ECB is approaching the point where it can assert that inflation has been brought down to the target level of 2%. If this is the case, there would be little reason to maintain high borrowing costs. The increasing interest rate differential favoring the U.S. could lead to a further decline in the EUR/USD exchange rate.

Hedge funds and asset managers are increasingly adopting net long positions on the dollar, reaching their highest levels since May. According to HSBC, the dollar is "hitting all the right notes" and shows no signs of weakening in 2025. Additionally, Wells Fargo suggests that Trump's political agenda, including tariffs, will further boost the USD index rally.

Speculative Positions in the U.S. Dollar

It is highly likely that the U.S. dollar will break tradition and end December in a positive position. This month is typically considered seasonally weak for the American currency, which usually declines at year-end. However, every rule has its exceptions.

In the daily chart, another attempt by EUR/USD bulls to launch a counterattack has ended in failure, further demonstrating their weakness. The recent retracement offers an opportunity to open or expand previously established short positions, targeting levels of 1.012 and 1.000. Sticking to the current strategy of selling on pullbacks remains the most logical course of action.
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Oil Compresses the Spring: Awaiting an Explosion!

The upper levels can't, and the lower levels won't? Speculators have increased their oil purchases at the fastest pace since September 2023, driven by expectations that new sanctions against Russia and Iran will tighten supply, while China's stimulus measures will boost demand. However, Brent crude oil prices remain stubbornly stagnant, neither rising nor dropping significantly. Is a revolutionary situation brewing in the oil market? If so, any breakout from the current medium-term range may have to wait until 2025. After all, Christmas is typically a time to pause business activities.

Dynamics of Speculative Positions in Oil

U.S. President Joe Biden signed a government funding bill that extends through March 2025, which has brought joy to financial markets. A slowdown in the U.S. economy caused by a government shutdown would have been detrimental to investors. Currently, the U.S. is a key driver of global GDP growth and oil demand. Bloomberg experts project a decrease of 2 million barrels in U.S. crude oil inventories for the week ending December 20, which is likely to support Brent and WTI oil prices.

However, China, India, and other Asian countries are expected to be the primary contributors to global oil demand growth in 2025, accounting for approximately 60% of the increase. OPEC forecasts an increase of 1.45 million barrels per day (b/d), while the International Energy Agency (IEA) estimates it at 1.08 million b/d.

Global Oil Demand Structure

However, the reality may not be as optimistic. The U.S.-China trade war is likely to slow down the Chinese economy. In 2023, China accounted for 16% of global oil demand, equivalent to 16.4 million barrels per day (b/d), an increase from just 9% in 2008. However, the country's strong demand for electric vehicles and its ongoing real estate crisis are reducing its appetite for oil. Gasoline and diesel fuel demand is believed to have peaked and is projected to be 3.6% lower in 2024 than it was in 2021.

U.S. tariffs on imports from China are causing concern in the oil market. For example, Donald Trump's statement that the European Union could face tariffs if it doesn't increase purchases of U.S. oil and gas diminished bullish momentum for Brent crude. Consequently, the price of this North Sea grade quickly returned to consolidation, and its price movement now resembles a spring that is being compressed. The question remains: when will it explode?

Oil concludes 2024 with mixed sentiments. Optimists expect to see growth in global demand, particularly from Asia and the U.S. In contrast, pessimists warn that non-OPEC+ countries may inundate the market with new supplies, potentially leading to a decrease in prices.

From a technical perspective, a triangle pattern continues to form on the daily Brent chart. A breakout above the upper boundary near $74 per barrel could create opportunities for long positions. On the other hand, a decisive breach of the $72 support level would suggest the potential for selling. An aggressive short entry might be considered if the price successfully tests the fair value at $72.45.
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Will the Bank of Japan Intervene?

Recent media reports have raised concerns about potential intervention by the Bank of Japan due to a significant weakening of the national currency, which has declined by approximately 13% since October. Many banks and investment firms view this as a likely scenario ahead of the Japanese central bank's meeting in January. Let's analyze this situation using technical analysis to find an answer.

On the daily chart, we apply three Fibonacci time zones:

The first zone from the July peak (brown color).
The second zone from the September low (blue color).
The third zone from the December 3rd low (green color).
We identified a point where three timelines from different zones converge around January 12–13: the 11th line of the brown grid, the 10th line of the blue grid, and the 8th line of the green grid. However, since the chart does not account for future weekends—including the New Year holiday—the adjusted date is closer to January 21–22, coinciding with the BOJ meeting scheduled for January 23–24. It seems that following this meeting, a long-term strengthening of the yen may begin, potentially breaking below the December low and dipping beneath the lower boundary of the ascending pink price channel. In this context, the prospect of intervention becomes less significant, as the USD/JPY pair could decline due to an interest rate hike.

There is still a month until the central bank meeting. During this time, a local decline in the currency pair is possible, potentially approaching either the red line of the descending channel or the pink line of the ascending channel. A short-term rise to the 158.70 level may follow, which could ultimately form a triangular (flag-like) pattern. Alternatively, a different chart pattern might emerge if the price fails to break above the upper boundary of the descending price channel (a descending flag).
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