Eurostoxx -0.3%Germany DAX -0.6%France CAC 40 -0.2%UK FTSE -0.1%Spain IBEX -0.1%Italy FTSE MIB -0.1%The market mood is leaning towards the defensive side today, with watchful eyes on key US data later in the day. There is a lot of anticipation on the latest update/snapshot of the US economy, even if the data is very much delayed and going to be a hell of a mess to decipher. As a reminder, we will be getting the latest non-farm payrolls and retail sales data from the US at 1230 GMT later. The former is going to include both the October and November numbers, with BLS already warning that there will be “higher-than-usual variances”. This article was written by Justin Low at investinglive.com. 🔗 Source 💡 DMK Insight European indices are slipping, and here’s why that matters: traders are bracing for US economic data that could shift sentiment. With the Eurostoxx down 0.3% and the DAX off 0.6%, the cautious tone suggests investors are hedging against potential volatility. The upcoming US economic indicators, particularly employment and inflation figures, could trigger significant market reactions. If the data points to stronger-than-expected growth, we might see a reversal in risk-off sentiment, pushing indices higher. Conversely, disappointing numbers could deepen the current bearish trend. Traders should keep an eye on the 50-day moving average for the DAX, currently around 15,500, as a break below could signal further downside. Additionally, watch for how US market participants react—if institutions start reallocating assets based on the data, it could create ripple effects across European markets. The real story is how quickly sentiment can shift, so stay alert for any surprises in the data release. 📮 Takeaway Monitor the DAX around 15,500; a break below could lead to increased selling pressure if US data disappoints.

Prior 51.4Manufacturing PMI 50.6 vs 48.1 expectedPrior 47.8Composite PMI 50.1 vs 50.3 expectedPrior 50.4It’s a polarising release with the French services sector slumping in December while the manufacturing sector posts a beat on activity. At the balance though, it still leads to a bit of a drag to the French economy with overall activity basically stagnating in the final month of the year. Looking at the details, employment conditions held up while price developments were little changed compared to November. HCOB notes that:“French private sector business conditions appear largely static in December. The HCOB flash PMI remains marginally in growth territory, yet it signals a softer expansion compared to the prior month, reflecting an economy still weighed down by uncertainty among households and firms. Beneath the surface, however, sectoral adjustments have occurred: manufacturing stabilised, whereas services lost momentum, leaving the aggregate picture flat and the overall French economy sluggish. “The flash Manufacturing PMI managed a modest climb past the 50.0-point mark as the year drew to a close. December brought encouraging signs in indices for both output and order books, with foreign demand providing a notable lift. Another optimistic reading of the Future Output Index and a renewed willingness among firms to expand their workforces provides a positive signal for the outlook. “However, so long as no budget is passed by the government, political uncertainty will remain a noticeable headwind for France’s economy. The passage of the social security budget is at least a small victory for Prime Minister Lecornu. However, subdued consumer sentiment and intense international competitive pressures from the likes of the US and China diminish growth prospects. The recently robust aviation industry could offer a glimmer of hope for the future by providing additional impetus to the manufacturing sector more broadly.” This article was written by Justin Low at investinglive.com. 🔗 Source 💡 DMK Insight The recent PMI data from France is a mixed bag, and here’s why that matters: While the manufacturing sector beat expectations at 50.6, the services sector’s slump indicates underlying economic fragility. This divergence could lead to volatility in the euro, especially as traders assess the implications for the ECB’s monetary policy. If the services sector continues to lag, it might prompt the ECB to reconsider its tightening stance, impacting euro pairs significantly. Watch for key levels around 1.05 for EUR/USD; a break below could signal further weakness. On the flip side, the manufacturing beat suggests some resilience, which could support bullish positions in industrial stocks or commodities linked to manufacturing. Traders should monitor the upcoming economic releases closely, as they could provide clearer direction on whether this PMI data is a one-off or part of a broader trend. Keep an eye on the 50.0 mark in composite PMI as a psychological level; a sustained move below could trigger bearish sentiment across the board. 📮 Takeaway Watch the 1.05 level for EUR/USD; a break below could indicate further euro weakness amid mixed PMI signals.

Prior 48.2Services PMI 52.6 vs 53.0 expectedPrior 53.1Composite PMI 51.5 vs 52.4 expectedPrior 52.4This is in contrast to the better than expected French PMIs. In fact, the gains seen in the euro following the French release got erased. Overall, this doesn’t change anything for the ECB though. The central bank will likely maintain its neutral stance and keep monitoring economic developments.Comment:Commenting on the flash PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said: “What a mess, one might exclaim in view of the further downturn in the manufacturing sector. For the second month in a row, the headline manufacturing PMI has fallen deeper into sub-50 contraction territory, and for the first time in ten months, production is also declining. The latter comes as no surprise, as order intakes had already slumped in November. This trend has now continued, which does not bode well for the start of next year. “Despite warning lights flashing in the industry, there are significantly more manufacturing companies looking ahead to the coming year with confidence in December. The corresponding index has jumped upwards, possibly reflecting the fact that the government has launched a number of transport projects, decided on reforms to reduce bureaucracy, and wants to expand defence capabilities. Only if these measures result in an increase in incoming orders will the industry regain momentum. “The service sector is losing momentum for the second month in a row. However, business activity continues to grow visibly, as evidenced by the stronger expansion of staff. New business has been increasing steadily for three months and overall, the service sector is stabilizing the economy as a whole and is likely to contribute significantly to positive GDP growth in the fourth quarter. “While confidence in the manufacturing sector has increased visibly, the assessment of the next 12 months in the service sector has weakened in December. It is possible that people believe that the economic stimulus package and higher defence spending will primarily benefit construction companies, the mechanical engineering sector, and companies that produce directly or as suppliers in the defence sector, while service providers tend to come away empty-handed. “However, this does not have to be the case, because industrial production usually also involves activities that are accompanied by service providers such as consulting firms, auditors, and software developers. In addition, there are the so-called multiplier effects, because employees of companies that receive additional (government) orders are more likely to treat themselves to an extra visit to a restaurant or a concert that they would otherwise have foregone.” This article was written by Giuseppe Dellamotta at investinglive.com. 🔗 Source 💡 DMK Insight The recent PMI data shows a mixed bag, and here’s why that matters: With the Services PMI coming in at 52.6 versus an expected 53.0, and the Composite PMI at 51.5 compared to 52.4, traders should be cautious. This underperformance could signal a slowdown in economic activity, which might limit the ECB’s ability to tighten monetary policy further. The euro’s initial gains following the French PMIs were quickly erased, indicating that traders are skeptical about the overall economic outlook. For day traders and swing traders, this could mean increased volatility in the euro against major pairs like the USD. Watch for key levels around 1.05 and 1.06 for EUR/USD; a break below 1.05 could trigger further selling pressure. Additionally, keep an eye on upcoming ECB statements for any hints on future policy direction. The real story here is that while the French data looked solid, the broader Eurozone indicators suggest caution, which could lead to a risk-off sentiment in the markets. In the short term, monitor the PMI revisions and any shifts in trader sentiment, as they could impact the euro’s trajectory significantly. 📮 Takeaway Watch EUR/USD closely; a break below 1.05 could signal increased selling pressure as PMI data raises economic concerns.

Prior 53.6Manufacturing PMI 49.2 vs 49.9 expectedPrior 49.6Composite PMI 51.9 vs 52.7 expectedPrior 52.8After the downcast from the German numbers, this was well expected. Both the services and manufacturing prints are softer than estimated, pushing down overall activity in the euro area for December. That said, it still marks another expansion in activity at least to wrap up the year. That won’t change much for the ECB outlook as such. EUR/USD continues to trade near unchanged on the day at 1.1752 with large option expiries seen at 1.1750. HCOB notes that:“Economic growth slowed at the end of the year due to a slight contraction in the manufacturing sector and weaker momentum in the service sector. The weaker performance is primarily attributable to German industry, where the downturn intensified. In France, on the other hand, there are signs of a cautious recovery in industry, although a single monthly figure should not be overrated. However, the service sector, which had expanded last month, is stagnating there, while Germany’s service companies saw another solid rise in activity. All in all, the runway into the new year seems pretty unstable. “Despite a softening of growth, the service sector continues to look relatively robust. Companies have no reason to complain about new business and are therefore hiring additional staff. Looking ahead, however, companies have become somewhat more cautious, which is likely due in part to the decline in order backlogs. We expect the service sector to continue to play a stabilising role for the economy as a whole in the coming year. However, a real upturn will only succeed if the manufacturing sector regains its footing. “Cost inflation in the service sector reached its highest rate in nine months in December. The European Central Bank, which is meeting on December 18 and is monitoring service inflation particularly closely, is likely to see its publicly stated policy of leaving interest rates unchanged confirmed. It is clear that price pressure, driven in part by wage increases, is still noticeable.” This article was written by Justin Low at investinglive.com. 🔗 Source 💡 DMK Insight The latest PMI data shows a concerning trend in eurozone activity, and here’s why that matters: With the Manufacturing PMI at 49.2, below the expected 49.9, and the Composite PMI at 51.9 versus a forecast of 52.7, traders should brace for potential volatility. These figures indicate a contraction in manufacturing and a slowdown in services, which could signal broader economic weakness. This is particularly relevant as we head into a new trading year, where expectations for growth are already tempered. If this trend continues, it could lead to a bearish sentiment in the euro, impacting related assets like EUR/USD and European equities. Look for key support levels in the euro around 1.05 against the dollar; a breach could trigger further selling. Additionally, keep an eye on the European Central Bank’s response—if they hint at a more dovish stance in upcoming meetings, it could exacerbate the euro’s decline. The real story is how these numbers might affect market psychology; traders should monitor sentiment indicators closely as we approach year-end. 📮 Takeaway Watch for EUR/USD support at 1.05; a break could signal deeper euro weakness amid declining PMI data.

Prior 1.2%HICP +1.1% vs +1.1% y/y prelimPrior +1.3%Slight delay in the release by the source. Core annual inflation is seen slowing down from 1.9% to 1.7% in November, so that’s something to at least take note of. That said, the sticking point for inflation for the ECB is still very much the German economy at this point. So, that’s going to continue to keep them boxed in the current position of not moving on rates.As things stand, traders are not anticipating any major moves by the ECB even through to next year. That being said, things can still change depending on data developments in the months ahead. But for now, the outlook seems to be clear that the ECB won’t be afforded much room to make another move in terms of rate cuts. And policymakers are also of the same view with markets at the very least, even if they would like some added flexibility as an option.EUR/USD trades at 1.1753 currently, having little to do on the day amid a more mixed PMI showing with little to offer before we get to the slew of US data later. Large option expiries at 1.1750 will continue to keep things in check, acting as a magnet for price action in European trading at least. This article was written by Justin Low at investinglive.com. 🔗 Source 💡 DMK Insight Core inflation slowing to 1.7% is a mixed bag for ETH traders right now. While it signals potential easing from the ECB, the current ETH price at $2,945.17 suggests traders are still cautious. If inflation continues to decline, we might see a bullish trend in crypto as liquidity increases. However, keep an eye on the ECB’s next moves; any hint of tightening could send ETH tumbling. Watch for key support around $2,900 and resistance at $3,000. If ETH breaks above that resistance, it could trigger a wave of buying, but a failure to hold above $2,900 might lead to a sell-off. The real story is how this inflation data could ripple through related markets, especially if it impacts risk sentiment. Institutional players might react differently than retail, so monitoring their positions could provide insights into future price movements. 📮 Takeaway Watch ETH closely; a break above $3,000 could signal a bullish trend, while failure to hold $2,900 might trigger a sell-off.

Prior 51.3Manufacturing PMI 51.2 vs 50.4 expectedPrior 50.2Composite PMI 52.1 vs 51.6 expectedPrior 51.2These are nice beats, but the commentary isn’t as good. The agency cites lacklustre growth, worryingly widespread job losses and renewed upturn in selling price inflation across both goods and services.It keeps the BoE on track to cut rates on Thursday, but the central bank will likely sound more cautious on the next moves, remaining highly data-dependent. There’s a risk that they overease, so the market might scale back a bit the dovish expectations.Key Findings:Output growth accelerates in December, led by sharpest rise in new business for 14 monthsComment:Chris Williamson, Chief Business Economist at S&P Global Market Intelligence: “December’s flash PMI surveys brought welcome news on faster economic growth at the end of the year, with businesses buoyed in part by the post-Budget lifting of uncertainty. The PMI is consistent with GDP growth accelerating to 0.2% in December, albeit with a more modest 0.1% gain signalled for the fourth quarter as a whole. “It’s a big relief that business confidence has not slumped in a repeat of last year’s post-Budget gloom. Instead, companies have ended the year on a slightly more optimistic note amid signs of improving demand now that some of the uncertainty created by the Budget has cleared. New orders are in fact growing at the fastest rate for over a year. “However, the overall pace of output and demand growth remains lacklustre, and the expansion is still very dependent on technology and financial services activity, with many other parts of the economy struggling to grow or in decline. “Job losses are also again worryingly widespread, and it remains to be seen whether the uptick in orders during December will persuade more companies to start hiring again, especially as rising staff costs continue to be reported as one of the key concerns of businesses. These higher cost pressures were in turn cited as the key cause of a renewed upturn in selling price inflation across both goods and services. “The sluggish growth and worrying jobs data from the flash PMI data therefore suggest that the odds remain in favour of a further cut to interest rates at the December MPC meeting, but that the path to further rate cuts in 2026 remains very data dependent, as policymakers await confirmation that price pressures are going to soften materially as the year proceeds.” This article was written by Giuseppe Dellamotta at investinglive.com. 🔗 Source 💡 DMK Insight The recent PMI data shows slight growth, but underlying issues could spook traders. While the Manufacturing PMI beat expectations at 51.2, the Composite PMI’s rise to 52.1 is overshadowed by concerns over job losses and inflation in selling prices. This mixed bag keeps the Bank of England’s (BoE) tightening path uncertain. Traders should be cautious; the BoE might still raise rates, but the economic backdrop suggests volatility ahead. If inflation continues to rise, we could see a shift in market sentiment, especially in GBP pairs. Watch for key resistance levels around 1.25 in GBP/USD and support near 1.20. A breach in either direction could trigger significant moves. On the flip side, if the market reacts negatively to these inflation concerns, we might see a flight to safety in assets like gold or the USD. Keep an eye on the upcoming economic indicators and central bank commentary for further clues on market direction. 📮 Takeaway Monitor GBP/USD around 1.25 resistance and 1.20 support; volatility is likely as inflation concerns grow.

It’s a quiet one so far today with the dollar holding steadier at the balance, after some struggles in the past week. A stronger Chinese yuan continues to act as a headwind for the greenback, with USD/CNY on the verge of 7.04 today. The onshore yuan is at its highest against the dollar since October 2024. Pain.Besides that, the euro is also one that has made some decent headway against the dollar since the FOMC meeting last week. EUR/USD is taking aim at the 1.1800 mark but buyers are taking a bit of a breather today. The pair remains locked in near 1.1750 on the day, despite a mix of PMI data from the euro area earlier. Large option expiries at the 1.1750 level itself are in play, keeping price action more boxed in – at least before we get to the key US data releases later today.Overall, USD/JPY is one of the more interesting ones with the pair now testing waters below the 155.00 mark once again. The figure level has posed a bit of a challenge to sellers since the start of December, in acting as a key daily support level to prevent a steeper decline. As such, that will be one to watch today in case it leads to another downside leg in the dollar in the broader sense.Coming up later, the key risk event will be the US labour market report and retail sales data release. It is going to be a very messy one with the jobs data set to combine both the October and November numbers.But even so, the data points will be a vital update/snapshot of the US economy and one that market players have been long awaiting for ever since the government shutdown. So even if it might be a muddy picture, it is still one that traders and investors will decide to work with in what looks to be the final real trading week of the year. This article was written by Justin Low at investinglive.com. 🔗 Source 💡 DMK Insight The dollar’s stability at current levels is crucial as it faces pressure from a strengthening yuan. With USD/CNY nearing 7.04, traders should be aware of the implications for forex pairs involving the dollar. A stronger yuan could signal increased Chinese economic resilience, which might lead to shifts in global trade dynamics. If the yuan continues to appreciate, we could see further downside for the dollar, particularly against emerging market currencies. Watch for any breaks below 7.04, which could accelerate selling pressure on the dollar. Additionally, keep an eye on U.S. economic indicators this week, as any signs of weakness could exacerbate the dollar’s struggles. The real story here is how the dollar’s performance against the yuan could ripple through other forex pairs, especially those tied to commodities, as a stronger yuan may also influence commodity prices. Traders should monitor the daily charts for USD/CNY and related pairs for breakout signals, as well as any shifts in market sentiment that could affect dollar demand. 📮 Takeaway Watch for USD/CNY breaking below 7.04, which could signal further dollar weakness and impact related forex pairs.

Prior -78.7Economic sentiment 45.8 vs 38.7 expectedPrior 38.5The current conditions index might show a slight decline but there is a major beat on the expectations outlook. So, that really outweighs the headline reading here. ZEW notes that expectations have become more positive and that chances for a recovery of the economy are looking good, which is being reflected in the sentiment among investors. The key boon of course being a more expansive fiscal policy, which is expected to provide new momentum to the German economy.That’s a positive note at least but nothing that will get the ECB moving just yet as German price pressures remain a key sticking point. EUR/USD remains little changed on the day at 1.1757 currently. This article was written by Justin Low at investinglive.com. 🔗 Source 💡 DMK Insight Economic sentiment just beat expectations, and here’s why that matters: The ZEW index showing a rise in expectations to 45.8 from an anticipated 38.7 is a significant indicator for traders. This uptick suggests that market participants are becoming more optimistic about future economic conditions, which could lead to increased investment and spending. For forex traders, this could mean a stronger Euro against the Dollar if the sentiment translates into actual economic performance. However, the slight decline in the current conditions index indicates that while expectations are improving, the present situation may still be shaky. This divergence could create volatility in the markets, especially if traders react to the mixed signals. Watch for the Euro to test resistance levels around recent highs, as a sustained move above those could signal a bullish trend. Keep an eye on related assets like European equities, which might also respond positively to this sentiment shift, but be cautious of any pullbacks in the current conditions index that could dampen enthusiasm. 📮 Takeaway Watch the Euro closely; a sustained break above recent highs could signal a bullish trend, but mixed signals from current conditions warrant caution.

Prior €19.4 billion; revised to €18.4 billionCompared to the month of October last year, exports to the US are seen down nearly 15% this October while imports are up just a little over 4%. That sees the trade surplus with the US narrow in October this year to €11.2 billion with it being €19.5 billion in 2024. Something, something tariffs I guess. This article was written by Justin Low at investinglive.com. 🔗 Source 💡 DMK Insight The narrowing trade surplus with the US is a red flag for traders: here’s why. A drop in exports by nearly 15% year-over-year signals weakening demand for European goods, which could impact the euro’s strength against the dollar. With imports rising over 4%, this imbalance may lead to increased pressure on the euro, especially if the trend continues. Traders should keep an eye on the €11.2 billion surplus; a further decline could trigger bearish sentiment in the forex market. Additionally, this data could influence central bank policies, particularly if inflationary pressures rise due to higher import costs. Look for key technical levels around the recent euro/dollar exchange rates. If the euro breaks below significant support levels, it could lead to a cascade effect across related assets, including commodities priced in euros. Keep monitoring the upcoming economic indicators and trade data, as they could provide further insights into the euro’s trajectory against the dollar in the coming weeks. 📮 Takeaway Watch the euro’s performance closely; a break below key support levels could signal further declines against the dollar in the coming weeks.

KEY POINTS:USDINR reaches a new record high as the bearish INR trend persistsThe pair rallied into a key resistance zone where we have the 91.00 handle and the upper bound of the channelUSD remains weak against major currenciesIndia’s Flash PMIs ease furtherAll eyes on the US NFP report todayFUNDAMENTAL OVERVIEWUSD:The USD has been weakening against all the major currencies since last week’s FOMC decision. The Fed delivered on expectations cutting by 25 bps and signalling a higher bar for further rate cuts, but Fed Chair Powell’s press conference was seen as fairly dovish. In fact, instead of sounding as neutral as possible and stressing data-dependency, he downplayed the inflation risk and emphasized the labour market weakness, suggesting that there’s more tolerance for higher inflation than for weaker labour market. The focus has now shifted to the US NFP and CPI reports that will wrap up the last real trading week of the year before market participants prepare for the holidays. Right now, the market is pricing 58 bps of easing by the end of 2026. If we get strong US data, especially on the labour market side, we will likely see a hawkish repricing which should give the US dollar a boost. On the other hand, weak data should weigh on the greenback further as the market will bring rate cut bets forward. INR:Despite the general USD weakness, the INR continues to drop into record lows against the greenback as the structural headwinds keep the pair in a bullish trend. In fact, from a risk management perspective, it’s better to just look for dip-buying opportunities instead of trying to time the tops.The US-India trade talks went well but we haven’t got any major breakthrough, and the expectations are now that a deal could be reached by April 2026. The India’s Flash PMIs today eased once again to the lowest reading since February due to softer growth. Price pressures were also seen muted, which might keep weighing on the INR as the RBI could still cut rates further at the next meeting.USDINR TECHNICAL ANALYSIS – DAILY TIMEFRAMEOn the daily chart, we can see that USDINR has finally reached the upper bound of the rising channel around the 91.00 handle. This is where we can expect the sellers to step in with a defined risk above the highs to position for a pullback into the lower bound of the channel. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into new highs.USDINR TECHNICAL ANALYSIS – 4 HOUR TIMEFRAMEOn the 4 hour chart, we can see that the bullish momentum stalled around the 91.00 handle as the sellers started to pile in. We can see that we have another minor upward trendline inside the channel that could act as support. If the price gets to it, we can expect the buyers to lean on the trendline with a defined risk below it to keep pushing into new highs. The sellers, on the other hand, will look for a break lower to increase the bearish bets into the lower bound of the channel. USDINR TECHNICAL ANALYSIS – 1 HOUR TIMEFRAMEOn the 1 hour chart, we can see that we have yet another minor trendline defining the bullish momentum on this timeframe. From a risk management perspective, the buyers will have a better risk to reward setup around the trendline, so they can have a defined risk below the trendline to position for a rally into new highs. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 90.40 level next.UPCOMING CATALYSTSToday we have the US NFP report. On Thursday, we get the US CPI data. This article was written by Giuseppe Dellamotta at investinglive.com. 🔗 Source 💡 DMK Insight The USDINR hitting a record high signals a critical moment for traders: the bearish trend in the INR shows no signs of reversing. As the pair approaches the 91.00 resistance zone, traders should be cautious. The USD remains weak against major currencies, which complicates the outlook. With India’s Flash PMIs easing further, it indicates slowing economic momentum, potentially putting additional pressure on the INR. The upcoming US NFP report could be a game-changer; strong employment data might bolster the USD, while weak numbers could exacerbate the INR’s decline. Keep an eye on the 91.00 level—if it breaks, we could see a significant move higher. On the flip side, if the NFP report disappoints, it may provide a temporary reprieve for the INR. Watch for volatility around this data release, as it could lead to rapid shifts in sentiment. Traders should also monitor the broader USD performance against other currencies for additional context. 📮 Takeaway Watch the 91.00 resistance level closely; a break could signal further upside for USDINR, especially with the NFP report looming.