Holiday Conditions Ahead

Welcome to this new trading week which will be our last one for this year.

Let’s shortly resume what has happened last week? The Federal Reserve raised rates by 50bp and stressed that more work needs to be done on fighting inflation despite a softer November U.S. inflation report. The European Central Bank surprised markets with a more aggressive hawkish tone. The DAX fell about 3.3 percent and below 14000 while the euro has held solid above 1.05. A cautiously stronger dollar led to a correction in the cable while the support around 1.21 remains intact.

Typically, the final two weeks of the year see a significant drop off in liquidity. However, thin liquidity can also transmit unexpected volatility but often without a clear direction. Traders do therefore better to be prepared for sideways and maybe choppy swings, rather than for trending markets. We for our part, will not reinvest much of our December gains and will start the Christmas holidays contemplatively.

The last interesting piece of economic data will be Friday’s PCE index.

Our trading ideas for today 19/12/22:

EUR/USD

Long @ 1.0640

Short @ 1.0580

GBP/USD

Long @ 1.2215

Short @ 1.2175

DAX® (GER40)

Long @ 13960

Short @ 13890

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Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.

We wish you good trades!

Any and all liability of the author is excluded.