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The Best Currency Pairs To Trade In December

Dec 03, 2018 - 11:30 AM
Julia Fedorova, Analyst of AMarkets

AMarkets presents 4 currency pairs, that can be profitable to trade in December.

Although EU leaders agreed on UK's Brexit deal at Brussels summit, which took place on November 25th, British politicians seem to be unhappy with the deal. Another vote is set up both in British and in the European Parliaments.

House of Commons will vote in December. The worst case scenario is Theresa May facing a no-confidence vote, which may lead to another reshuffle in the British government.Both Labour and the Conservatives have good chances of winning. If the UK Parliament rejects the Brexit deal, the volatility in pound crosses can increase significantly.

If the vote affects the British pound negatively, kiwi will be the main candidate for growth against the sterling. Goldman Sachs analysts say the New Zealand dollar may be the most stable currency in the next few months. For the first time since October, a weekly candle in the GBP/NZD pair has closed below the 1.8915 level. Added pressure on the asset is caused by 38.2% Fibo. If the price updates its local minimums, the GBPNZD decline may reach 1.8150 (61.8% Fibo).

Selling the EURNZD is another option to consider. The pair has already breached its previous support at 1.6775. If it holds below 38.2% Fibo at 1.6630, Kiwi will have good chances strengthen 400 points against the Euro, up to 1.6230 mark. The ECB interest rate decision, released on December 13, will be an important driver for the Euro. Italy’s economic turbulence is currently the main negative factor for the currency. If Italy presents its revised budget for 2019 to avoid EU sanctions, it may partially offset pressure on the euro.

Most analysts view the Brexit deal’s conditions as more favorable for the European Union, rather than for Great Britain itself. So, it may be worth anticipating the euro’s growth against the pound. Over the past months, traders got used to seeing the EUR/GBP pair within a tight range, but the present situation may force it out of this sideways trend. In the last year and a half, bears have failed to hold below 0.87 support, where 61.8% Fibo of the previous long-term trend is also located. Double bottom has been formed on a daily chart, and weekly timeframe shows an interesting bullish Dodge. With slight deviations, we can see an “abandoned baby” pattern, which is a strong reversal formation. If the price breaks through the 0.8930 barrier, where short- and long-term Fibonacci levels coincide, an uptrend may begin. Depending on the strength of fundamental factors, growth may reach last year August highs (0.93) or the recent highs at 0.9050.

The US dollar/Mexican peso is approaching its June highs. On a daily chart, we can see a bullish triangle breached upwards. The breakout of the 20.75 resistance level will allow the USD/MXN pair to climb further up to its two-year highs at around 22. The weekly chart shows a bullish triangle, which began to form in mid-2017. If the price manages to breach this pattern growth may continue up to 24 mark. Downward corrections into the range of 19-19.50 are possible within a long-term triangle. Among the fundamental factors affecting the US currency in December, the utmost attention should be paid to the US President Donald Trump’s meeting with Chinese President Xi Jinping at the G-20 summit on December 1 and to the release of the US macroeconomic indicators, including Nonfarm payrolls and Fed's interest rate decision.

Julia Fedorova,
AMarkets Analyst

The views and opinions expressed in this article are those of the authors and cannot be relied upon as trading advice or construed as providing recommendations of any kind. AMarkets shall not be held liable for any losses incurred from use of the information provided in this analytical review.