Psychology for major markets December 18th

EUR/USD – Dipped below 1.05 helped by weak IFO survey, but yield spreads suggest further significant downside will be difficult without a much more hawkish Fed or a clear tariff threat to Europe.

USD/JPY – Still well bid on the back of rising US yields, but reaching significant technical resistance and further upside now looks likely to be hard to achieve.

EUR/GBP – EUR/GBP dropping significantly below 0.83 on stronger than expected UK labour market data, but downside still looks quite limited as market continues to price a very slow rate of BoE easing.

AUD/USD – Making another new low for the year although yield spreads and risk sentiment suggest scope for recovery.

Equities – S&P 500 remaining resilient despite a mild correction from the post-election rally. Fed stance will be key this week, but hard to see the market pricing in anything much more hawkish than currently if the Fed cut as expected.