DBG Markets: Market Report for Dec 18, 2025

Risk-Off Sentiment Dominates U.S. Data and Central Banks Take Center Stage

Global markets faced significant selling pressure on Wednesday, with risk appetite dropping sharply. U.S. equities closed broadly lower, with the Nasdaq 100 leading the decline, plunging 1.81%. Investor concerns over potentially overvalued AI stocks and market concentration in tech giants resurfaced, driving widespread sectoral pullbacks.

Markets have shifted into defensive mode ahead of todays critical “Super Thursday” events. Following the conflicting labor data, investors are turning more risk-averse while awaiting the latest inflation figures.

U.S. CPI & Initial Jobless Claims Preview

Today‘s dual-data release from the U.S. will provide a definitive reality check for the Federal Reserve’s 2026 policy trajectory and could influence investor sentiment.

U.S. Inflation Outlook

The November CPI release is particularly important, as the October report was delayed due to U.S. government shutdowns, and no monthly CPI data for October will be published.

· Consensus forecast: Headline CPI expected to rise slightly to 3.1%

· Core CPI: Projected to remain at 3%

Initial Jobless Claims

Following last week‘s spike to 236,000—the largest increase since 2020—this week’s Initial Jobless Claims report is particularly critical. Forecasts range from 220,000 to 229,000.

A reading above consensus would confirm further deterioration in the labor market, potentially overriding any hawkish signals from previous job reports. Such an outcome could further temper risk sentiment and trigger another round of equity market selling.

US Equities Outlook: Nasdaq Taken Hit

Following weak labor data and rising unemployment this week, market concerns over the U.S. economic outlook have intensified, triggering broad risk aversion and reigniting worries over AI sector overvaluation. Major tech stocks fell sharply yesterday, weighing heavily on the Nasdaq 100.

UT100, Daily Chart

The Nasdaq 100 faces key resistance near 26,000, potentially forming a double-top pattern that signals bearish momentum. While the index is not technically in a bear market, recent price action suggests growing downside pressure and the possibility of a corrective phase.

The breakdown below 25,000 yesterday indicates the tech index may be entering a near-term consolidation trend, with the next support zone around 24,000–23,900.

US500, Daily Chart

The S&P 500 (US500) is facing similar pressure, with resistance near 6,900 forming a potential double-top pattern. The 6,780 area has acted as a key support level; a breach of this zone could push the benchmark index lower in the near term, signaling a potential corrective move.

Central Bank “Super Thursday”: BoE and ECB

Today marks a key moment for European monetary policy, with the Bank of England (BoE) and the European Central Bank (ECB) charting divergent paths.

Bank of England: Dovish Cut Expected

Markets are pricing in a 90% probability of a 25-basis-point rate cut to 3.75% at todays BoE meeting. UK inflation has eased faster than expected, falling to 3.2%, giving the Monetary Policy Committee (MPC) room to ease policy. The market focus now is whether the BoE will deliver a dovish cut or adopt a more neutral stance, as much of the easing is already priced in.

Market Considerations:

· Policy Guidance: Will Governor Andrew Bailey hint at further cuts？

· Vote Split: A close 5-4 vote in favor of a cut is anticipated, with Bailey potentially casting the deciding vote. A larger majority for easing would reinforce a dovish bias.

A dovish cut accompanied by signals of more easing could weigh on the GBP versus major currencies such as the USD and EUR.

European Central Bank: Holding Steady

The ECB is widely expected to keep rates unchanged at 2.00%, following previous signals of a potential easing pause. Compared with the BoE, the ECB is the less “dramatic” central bank in this two-week span of high-profile monetary events.

GBPUSD & EURGBP Outlook

GBPUSD, H4 Chart

If the BoE delivers a dovish cut, GBPUSD is likely to remain under pressure. The 1.3450 resistance level may continue to cap upside, while a break below 1.3350 could open the door for further downside.

EURGBP, H4 Chart

Gold Outlook: Bullish Structure Remain

As global markets pivot into defensive mode ahead of todays high-impact U.S. data, gold continues to assert itself as the premier safe-haven asset. While risk-sensitive sectors like tech face heavy selling pressure, gold has maintained a structurally bullish posture, supported by the broader themes of Fed easing, yield sensitivity, and heightened risk aversion.

XAUUSD, H2 Chart

Technically, golds upside remains capped near the 4,350 resistance, approaching all-time highs. Pullbacks within this level continue to present buy-the-dip opportunities, with the 4,300–4,350 range acting as a near-term intraday range for traders. A clear breakout above 4,350 would be needed to signal further upside momentum.