While recent data has shown core inflation moderating, core PCE is on track to average below target at just 1.6% annualised over the past three months.Federal Reserve Chair Jerome Powell made clear that concerns about future inflation, especially from tariffs, remain top of mind.“If you just look backwards at the data, that’s what you would say… but we have to be forward-looking,” Powell said. “We expect a meaningful amount of inflation to arrive in the coming months, and we have to take that into account.”While the economy remains strong enough to buy time, policymakers are closely monitoring how tariff-related costs evolve before shifting policy. Powell also stated that without these forward-looking risks, rates would likely already be closer to the neutral rate, which is a full 100 basis points from current levels.
2. The Unemployment Rate anchor
Powell repeatedly cited the 4.2% unemployment rate during the press conference, mentioning it six times as the primary reason for keeping rates in restrictive territory. At this level, employment is ahead of the neutral rate.“The U.S. economy is in solid shape… job creation is at a healthy level,” Powell added that real wages are rising and participation remains relatively strong. He did, however, acknowledge that uncertainty around tariffs remains a constraint on future employment intentions.If not for a decline in labour force participation in May, the unemployment rate would already be closer to 4.6%. Couple this with the continuing jobless claims ticking up and hiring rates subdued, risks are building around labour market softening.
3. Autumn Meetings are Live
While avoiding firm forward guidance, Powell hinted at a timeline:“It could come quickly. It could not come quickly… We feel like the right thing to do is to be where we are… and just learn more.”This suggests the Fed will remain on hold through the July meeting, using the summer to assess incoming data, particularly whether tariffs meaningfully push inflation higher. If those effects prove limited and unemployment begins to rise, the stage could be set for a rate cut in September.
The seven-day Santa rally window runs from 24 December through 5 January 2026.
This period has historically outperformed average market conditions, driven by holiday optimism, thin trading volumes, year-end bonus spending, tax-loss completions, and institutional portfolio rebalancing.
Technology stocks have historically been standout performers during the Santa rally period, averaging gains of 2.1 per cent across the seven-day window, although results vary significantly year to year.
The Nasdaq Composite typically posts stronger returns than broader indices, with an 82 per cent historical win rate for December-January performance.
However, tech stocks do currently face a challenging setup. The Nasdaq gained 19 per cent year-to-date (YTD) but has come under pressure in recent months, with AI-related stocks experiencing sentiment dips.
Key drivers:
E-commerce momentum: Black Friday 2025 spending hit a record US$11.8 billion, with sustained demand through December as last-minute purchases drive revenue for Amazon and digital payment processors.
Holiday infrastructure: Cloud computing, semiconductors, and digital payments capture the backend of holiday spending surges, benefiting from both retail transactions and year-end enterprise spending.
Concentration risk: Five companies (Nvidia, Microsoft, Apple, Alphabet, Amazon) account for 30 per cent of major index returns. Down periods for these companies, as seen during recent AI-sentiment-driven volatility, could bring down the sector as a whole.
Gold enters one of its strongest seasonal periods from mid-December through February, having posted gains every year since 2015 during this window.
The gold price is maintaining strength throughout December despite the dollar's resilience, positioning well as the Christmas jewellery season peaks.
Key drivers:
Seasonal jewellery demand: Approximately two-thirds of annual gold production flows into jewellery fabrication. Christmas, Lunar New Year (February 2026), and the Indian wedding season create regular buying patterns as merchants stock up in December.
Dollar weakness patterns: December has historically been the dollar's weakest month, with negative bias from 22 December onwards. Gold's inverse correlation to the dollar could provide upside momentum during this period.
Real yields environment: With the Fed cutting rates to 3.5-3.75 per cent while inflation remains around 3 per cent, real yields stay relatively low, potentially supporting higher gold valuations.
Central bank accumulation: Continued central bank purchases and year-end institutional portfolio rebalancing could provide additional support.
December has historically been the most bullish month for EUR/USD, with the world's most-traded currency pair posting an average return of +1.2 per cent over the past 50 years.
The US dollar regularly shows clear weakness during the Santa rally period, particularly from 22 December onwards. However, the Fed's hawkish rate cut has provided some dollar support this year.
Key drivers:
Holiday liquidity dynamics: Lower institutional trading volumes during the holiday period reduce dollar support as retail traders and smaller participants dominate. Thin markets can amplify moves in either direction.
Year-end rebalancing: European and Asian investors often repatriate funds or rebalance portfolios at year-end, creating demand for non-dollar currencies that typically support EUR and AUD against USD.
Dollar strength from hawkish Fed: The Fed's December rate cut came with guidance of fewer cuts in 2026. This has kept the dollar elevated despite lower rates, possibly limiting the ability of EUR/USD seasonal patterns to influence the market.
Consumer discretionary and retail stocks historically outperform during the holiday period, with the sector averaging 1.9-2.1 per cent gains during the Santa rally window. Holiday shopping accounts for 30-40 per cent of annual retail revenue for many companies, making this period crucial for full-year performance.
Key drivers:
Record holiday traffic: A record 202.9 million consumers shopped during the Thanksgiving-Cyber Monday weekend, up from 197 million in 2024. November spending surged 3.8 per cent year-over-year, with total holiday spending projected to exceed US$1 trillion for the first time.
High-income shoppers trend: Value-oriented retailers (TJX, Five Below) and those with strong omnichannel presence are capturing a disproportionate share of value over retailers targeting low-middle income earners.
Post-Fed tailwind: The December rate cut provides marginal relief through lower borrowing costs, potentially extending holiday spending into late December as credit becomes more accessible.
5. Bitcoin
Bitcoin's December performance has been highly inconsistent, with a median return of -3.2 per cent, contrasting with traditional Santa rally patterns. Currently, Bitcoin is trading around US$87,500, down approximately 30 per cent from its October all-time high of US$126,210.
However, there are signals that the historically volatile asset could see a Santa-led bounce this year.
Key drivers:
Institutional infrastructure in place: More than US$120 billion is now held in spot Bitcoin ETFs, which provides a framework that could support capital flows if risk sentiment improves, although inflows are not assured.
Pro-crypto policy expectations: Discussion around potential developments such as a US strategic Bitcoin reserve and the CLARITY Act could influence sentiment going into 2026, although outcomes remain uncertain.
Four-year cycle inflection point: The recent sell-off came roughly 18 months after the most recent Bitcoin halving, a point linked to turning points in some past cycles, with the four-year narrative potentially influencing market behaviour.
The December Fed meeting delivered a 25 basis point cut, but the hawkish tone has set expectations for fewer rate cuts in 2026.
The Nasdaq's 19 per cent YTD gain has pushed valuations to elevated levels as AI-stock sentiment begins to dip.
Five companies account for 30 per cent of index returns, placing portfolio concentration at concerning levels.
Reduced holiday liquidity amplifies both moves and risks. Thin trading volumes can create exaggerated reactions to headlines, particularly around geopolitical events or economic data.
Is Santa coming to town?
The Santa Claus rally remains one of the better-known seasonal patterns in financial markets, but a historical hit rate of around 72 per cent also implies meaningful years where it does not play out.
A more balanced way to view the Santa rally window is as one input among many.
Seasonal observations can be considered alongside technical levels, fundamental drivers, and risk management — particularly given how quickly sentiment can change in thin holiday conditions.
And, if you can, take time away from the screens and enjoy the break.
Every trader has had that moment where a seemingly perfect trade goes astray.
You see a clean chart on the screen, showing a textbook candle pattern; it seems as though the market planets have aligned, and so you enthusiastically jump into your trade.
But before you even have time to indulge in a little self-praise at a job well done, the market does the opposite of what you expected, and your stop loss is triggered.
This common scenario, which we have all unfortunately experienced, raises the question: What separates these “almost” trades from the truly higher-probability setups?
The State of Alignment
A high-probability setup isn’t necessarily a single signal or chart pattern. It is the coming together of several factors in a way that can potentially increase the likelihood of a successful trade.
When combined, six interconnected layers can come together to form the full “anatomy” of a higher-probability trading setup:
Context
Structure
Confluence
Timing
Management
Psychology
When more of these factors are in place, the greater the (potential) probability your trade will behave as expected.
Market Context
When we explore market context, we are looking at the underlying background conditions that may help some trading ideas thrive, and contribute to others failing.
Regime Awareness
Every trading strategy you choose to create has a natural set of market circumstances that could be an optimum trading environment for that particular trading approach.
For example:
Trending regimes may favour momentum or breakout setups.
Ranging regimes may suit mean-reversion or bounce systems.
High-volatility regimes create opportunity but demand wider stops and quicker management.
Investing time considering the underlying market regime may help avoid the temptation to force a trending system into a sideways market.
Simply looking at the slope of a 50-period moving average or the width of a Bollinger Band can suggest what type of market is currently in play.
Sentiment Alignment
If risk sentiment shifts towards a specific (or a group) of related assets, the technical picture is more likely to change to match that.
For example, if the USD index is broadly strengthening as an underlying move, then looking for long trades in EURUSD setups may end up fighting headwinds.
Setting yourself some simple rules can help, as trading against a potential tidal wave of opposite price change in a related asset is not usually a strong foundation on which to base a trading decision.
Key Reference Zones
Context also means the location of the current price relative to levels or previous landmarks.
Some examples include:
Weekly highs/lows
Prior session ranges, e.g. the Asian high and low as we move into the European session
Major “round” psychological numbers (e.g., 1.10, 1000)
A long trading setup into these areas of market importance may result in an overhead resistance, or a short trade into a potential area of support may reduce the probability of a continuation of that price move before the trade even starts.
Market Structure
Structure is the visual rhythm of price that you may see on the chart. It involves the sequences of trader impulses and corrections that end up defining the overall direction and the likelihood of continuation:
Uptrend: Higher highs (HH) and higher lows (HL)
Downtrend: Lower highs (LH) and lower lows (LL)
Transition: Break in structure often followed by a retest of previous levels.
A pullback in an uptrend followed by renewed buying pressure over a previous price swing high point may well constitute a higher-probability buy than a random candle pattern in the middle of nowhere.
Compression and Expansion
Markets move through cycles of energy build-up and release. It is a reflection of the repositioning of asset holdings, subtle institutional accumulation, or a response to new information, and may all result in different, albeit temporary, broad price scenarios.
Compression: Evidenced by a tightening range, declining ATR, smaller candles, and so suggesting a period of indecision or exhaustion of a previous price move,
Expansion: Evidenced by a sudden breakout, larger candle bodies, and a volume spike, is suggestive of a move that is now underway.
A breakout that clears a liquidity zone often runs further, as ‘trapped’ traders may further fuel the move as they scramble to reposition.
A setup aligned with such liquidity flows may carry a higher probability than one trading directly into it.
Confluence
Confluence is the art of layering independent evidence to create a whole story. Think of it as a type of “market forensics” — each piece of confirmation evidence may offer a “better hand’ or further positive alignment for your idea.
There are three noteworthy types of confluence:
Technical Confluence – Multiple technical tools agree with your trading idea:
Moving average alignment (e.g., 20 EMA above 50 EMA) for a long trade
A Fibonacci retracement level is lining up with a previously identified support level.
Momentum is increasing on indicators such as the MACD.
Multi-Timeframe Confluence – Where a lower timeframe setup is consistent with a higher timeframe trend. If you have alignment of breakout evidence across multiple timeframes, any move will often be strengthened by different traders trading on different timeframes, all jumping into new trades together.
3. Volume Confluence – Any directional move, if supported by increasing volume, suggests higher levels of market participation. Whereas falling volume may be indicative of a lesser market enthusiasm for a particular price move.
Confluence is not about clutter on your chart. Adding indicators, e.g., three oscillators showing the same thing, may make your chart look like a work of art, but it offers little to your trading decision-making and may dilute action clarity.
Think of it this way: Confluence comes from having different dimensions of evidence and seeing them align. Price, time, momentum, and participation (which is evidenced by volume) can all contribute.
Timing & Execution
An alignment in context and structure can still fail to produce a desired outcome if your timing is not as it should be. Execution is where higher probability traders may separate themselves from hopeful ones.
Entry Timing
Confirmation: Wait for the candle to close beyond the structure or level. Avoid the temptation to try to jump in early on a premature breakout wick before the candle is mature.
Retests: If the price has retested and respected a breakout level, it may filter out some false breaks that we will often see.
Then act: Be patient for the setup to complete. Talking yourself out of a trade for the sake of just one more candle” confirmation may, over time, erode potential as you are repeatedly late into trades.
Session & Liquidity Windows
Markets breathe differently throughout the day as one session rolls into another. Each session's characteristics may suit different strategies.
For example:
London Open: Often has a volatility surge; Range breaks may work well.
New York Overlap: Often, we will see some continuation or reversal of morning trends.
Asian Session: A quieter session where mean-reversion or range trading approaches may do well
Trade Management
Managing the position well after entry can turn probability into realised profit, or if mismanaged, can result in losses compounding or giving back unrealised profit to the market.
Pre-defined Invalidation
Asking yourself before entry: “What would the market have to do to prove me wrong?” could be an approach worth trying.
This facilitates stops to be placed logically rather than emotionally. If a trade idea moves against your original thinking, based on a change to a state of unalignment, then considering exit would seem logical.
Scaling & Partial Exits
High-probability trade entries will still benefit from dynamic exit approaches that may involve partial position closes and adaptive trailing of your initial stop.
Trader Psychology
One of the most important and overlooked components of a higher-probability setup is you.
It is you who makes the choices to adopt these practices, and you who must battle the common trading “demons” of fear, impatience, and distorted expectation.
Let's be real, higher-probability trades are less common than many may lead you to believe.
Many traders destroy their potential to develop any trading edge by taking frequent low-probability setups out of a desire to be “in the market.”
It can take strength to be inactive for periods of time and exercise that patience for every box to be ticked in your plan before acting.
Measure “You” performance
Each trade you take becomes data and can provide invaluable feedback. You can only make a judgment of a planned strategy if you have followed it to the letter.
Discipline in execution can be your greatest ally or enemy in determining whether you ultimately achieve positive trading outcomes.
Bringing It All Together – The Setup Blueprint
Final Thoughts
Higher-probability setups are not found but are constructed methodically.
A trader who understands the “higher-probability anatomy” is less likely to chase trades or feel the need to always be in the market. They will see merit in ticking all the right boxes and then taking decisive action when it is time to do so.
It is now up to you to review what you have in place now, identify gaps that may exist, and commit to taking action!
Bitcoin has now outlasted the peak of all its previous four-year cycles.
For over a decade, every Bitcoin cycle has followed the same sequence: consolidation, breakout, mania, crash. Rinse and repeat.
Timeline-wise, we should be at the post-mania inflection point, waiting for the seemingly inevitable crash.
Yet unlike previous runs, this cycle never saw its “mania phase.” Instead, Bitcoin has spent the past year grinding sideways, touching new all-time highs without a euphoric blow-off top that defined previous cycles.
The fact that this euphoria period never materialised brings into question whether this cycle still has room to run, or has the market simply matured past the point of mania-driven peaks?
The Historical Four-Year Pattern
The traditional Bitcoin cycle was simple. Every four years, a halving event would reduce the block reward (amount of new Bitcoin being created) by half, creating a supply shock that triggered major bull markets.
The 2013 cycle, the 2017 cycle, and the 2021 cycle all followed this script. Each halving was followed by a 3-to 9-month growth period, then a full-on mania period, before topping out 12 to 18 months after the event.
Following the most recent halving in April 2024, Bitcoin experienced five months of sideways consolidation, then hinted at making its anticipated breakout into mania after the US election… but quickly returned to sideways consolidation for the next year.
We have seen new ATHs and the price has made some notable gains during the period, but the overall momentum has been much weaker.
This failure to repeat the frenzies of the past three cycles has brought into question how much influence the Bitcoin halving truly has on the market anymore.
No Longer a Supply Shock
In previous cycles, the halving created a situation where prices had to rise to clear the same dollar amount of miner expenses (who were now earning half the Bitcoin).
Bitcoin miners would simply not sell until the price reached a certain level, creating a supply shock that would drive prices higher.
Miners still do this today; however, the market’s maturation and the institutional adoption of Bitcoin have dampened the impact.
Selling off Bitcoin is no longer a balancing act where miners hold influence over price. The market has deep liquidity that can handle significant flows in either direction.
Institutional ETFs routinely purchase more Bitcoin in a single day than miners produce in a month.
The supply reduction that once drove dramatic price movements is now easily absorbed by a market with institutional buyers providing constant demand.
If the Halving Isn't Driving Cycles, What Is?
The overriding narrative is that the Bitcoin cycle is now tied to the global liquidity cycle.
If you plot the Global M2 Money Supply versus Bitcoin on a year-on-year basis, you can see that every Bitcoin top has correlated with the peaks of Global M2 liquidity growth.
This isn't unique to Bitcoin. The Gold price has closely mirrored the rate of Global M2 expansion for decades.
When central banks flood the system with liquidity, capital tends to move into stores of value or high-risk assets. When they drain liquidity, those same assets tend to retreat.
However, this is a correlation; these relationships may change and should not be relied upon as indicators of future performance.
Is the Dollar Just Getting Weaker?
The U.S. Dollar Strength Index tells the other side of this liquidity story. Bitcoin versus the dollar year-on-year has been almost perfectly inversely correlated.
Simply put, as fiat currencies lose purchasing power, “hard” assets like Bitcoin and Gold start to appreciate. Not because of improved fundamentals, but because the currencies they are paired against are simply worth less.
The Self-Fulfilling Prophecy
Beyond the charts and patterns, there is also the psychological notion that the four-year cycle persists precisely because people believe it will.
People have been conditioned by three complete cycles to expect Bitcoin to peak somewhere between 400 and 600 days after a halving.
This collective belief shapes behaviour: traders take profits, investors take fewer risks, and retail enthusiasm wanes. The prophecy fulfils itself.
When everyone believes Bitcoin should peak 18 months after a halving, the combined selling pressure can create exactly that outcome — regardless of whether the underlying driver still exists.
The current market weakness, with Bitcoin dropping over 20% from its October record high, occurred almost precisely at this 18-month mark.
Is This Cycle Built Different?
Despite this on-cue sell-off, this cycle still has the potential to break away from the historical four-year pattern.
Increased ETF adoption by institutional investors has brought in higher quality and consistent ownership of Bitcoin.
Unlike retail traders, who often panic-sell during corrections, institutional holders tend to maintain their positions through volatility.
For example, Michael Saylor’s high-profile MicroStrategy fund has continued to purchase Bitcoin through market weakness. Recently reporting a purchase of 8,178 BTC at an average price of $102,171.
Recent MicroStrategy BTC purchases
Another hard indicator that diverges from previous cycle peaks is the amount of Bitcoin being held on centralised exchanges.
The current amount of BTC on CEXs is unusually low. This pattern is generally seen closer to cycle lows, rather than peaks.
Other factors supporting the break of the four-year mould are coming out of the Whitehouse.
A comprehensive regulatory framework through the CLARITY Act represents structural changes and boundaries for regulatory bodies that didn't exist in previous cycles.
And the move to establish a Strategic Bitcoin Reserve will see all government-held forfeited Bitcoin (approximately $30 billion worth) transferred into a government reserve, signalling Bitcoin as a strategic asset like Gold and oil.
Estimated U.S. Government Bitcoin holdings
Bitcoin Has Finally Grown Up
The four-year cycle has been a useful heuristic, but heuristics break down when conditions change. Institutional buyers, regulatory clarity, and strategic reserves represent genuinely new conditions historical patterns don’t account for.
At the same time, dismissing the cycle entirely would be premature. The self-fulfilling aspect means it retains predictive power even if the original cause has weakened.
Market participants act on the pattern they've learned, and their actions create the pattern they expect.
Perhaps the real insight is that the Bitcoin market cycles never had just one cause. They were always the result of multiple overlapping forces — programmed scarcity, liquidity conditions, sentiment, self-reinforcing expectations.
The cycle shifts character as some forces strengthen and others weaken. But whether the forces have shifted enough to break the four-year trend is yet to be determined.
The fundamental indicators show this cycle may have some life, but the psychological power of the four-year pattern could push it to another, predictable end.
You can trade BTC and other popular Crypto CFD pairs on GO Markets with $0 swaps until 31 December 2025.
Donald Trump has officially declared the Maduro regime in Venezuela a foreign terrorist organisation and ordered a "total and complete blockade" of the country's sanctioned oil tankers.
The U.S. has positioned 11 warships in the Caribbean to enforce the blockade, which could remove 400,000 to 500,000 barrels daily from global supply.
The move sent crude prices jumping over 2% and sparked renewed concerns about supply stability heading into 2026.
UKOUSD 48-hour chart
White House Chief of Staff Susie Wiles succinctly summarised the situation as: “Trump wants to keep on blowing boats up until Maduro cries uncle."
Brent crude jumped 2.4% to $60.33 per barrel, while WTI climbed 2.6% to $56.69.
If crude maintains its $60 per barrel price, analysts project the blockade, combined with potential Russian sanctions, could push prices toward $70 as Venezuela's already-devastated economy faces collapse.
Bank of Japan to Hike Rates to Highest Level in Decades
The Bank of Japan is set to raise interest rates to their highest level in three decades this Friday, with Governor Kazuo Ueda expected to lift the benchmark rate from 0.5% to 0.75%.
While modest by global standards, this marks a landmark step in Japan's departure from decades of near-zero rates and unconventional easing.
The decision comes amid significant market turbulence. Japanese government bond yields have surged, with 30-year bonds hitting record highs and 10-year yields reaching 19-year peaks.
The volatility stems partly from concerns under new Prime Minister Sanae Takaichi, who recently approved a $118 billion stimulus package with over 60% financed through borrowing.
While Friday's hike appears certain, policymakers have signalled caution as they push rates toward levels estimated between 1% and 2.5%.
Ueda's post-meeting press conference will be closely watched for signals about future increases.
Micron Forecasts Blowout Earnings on Booming AI Market
Micron Technology is projecting second-quarter earnings of $8.42 per share, nearly double Wall Street's $4.78 estimate.
Micron shares surged 7% in after-hours trading as markets reacted to the news that the AI-driven memory chip race is showing no signs of slowing.
As one of only three major suppliers of high-bandwidth memory (HBM) chips alongside SK Hynix and Samsung, Micron sits at a chokepoint in AI infrastructure.
The HBM specialised chips are essential for training and deploying generative AI models, and current demand is dramatically outpacing supply.
CEO Sanjay Mehrotra revealed that supply tightness will extend beyond 2026, with Micron expecting to fulfil only 50-70% of key customer demand in the medium term.
Micron projects revenue of $18.70 billion this quarter versus analyst estimates of $14.20 billion. The company has retooled their operations toward AI applications, even dissolving its consumer "Crucial" brand to concentrate on AI data centre demand.
HBM chips are now the bottleneck in AI system performance, and suppliers who can deliver at scale have the potential to capture large amounts of value over the coming years.
The seven-day Santa rally window runs from 24 December through 5 January 2026.
This period has historically outperformed average market conditions, driven by holiday optimism, thin trading volumes, year-end bonus spending, tax-loss completions, and institutional portfolio rebalancing.
Technology stocks have historically been standout performers during the Santa rally period, averaging gains of 2.1 per cent across the seven-day window, although results vary significantly year to year.
The Nasdaq Composite typically posts stronger returns than broader indices, with an 82 per cent historical win rate for December-January performance.
However, tech stocks do currently face a challenging setup. The Nasdaq gained 19 per cent year-to-date (YTD) but has come under pressure in recent months, with AI-related stocks experiencing sentiment dips.
Key drivers:
E-commerce momentum: Black Friday 2025 spending hit a record US$11.8 billion, with sustained demand through December as last-minute purchases drive revenue for Amazon and digital payment processors.
Holiday infrastructure: Cloud computing, semiconductors, and digital payments capture the backend of holiday spending surges, benefiting from both retail transactions and year-end enterprise spending.
Concentration risk: Five companies (Nvidia, Microsoft, Apple, Alphabet, Amazon) account for 30 per cent of major index returns. Down periods for these companies, as seen during recent AI-sentiment-driven volatility, could bring down the sector as a whole.
Gold enters one of its strongest seasonal periods from mid-December through February, having posted gains every year since 2015 during this window.
The gold price is maintaining strength throughout December despite the dollar's resilience, positioning well as the Christmas jewellery season peaks.
Key drivers:
Seasonal jewellery demand: Approximately two-thirds of annual gold production flows into jewellery fabrication. Christmas, Lunar New Year (February 2026), and the Indian wedding season create regular buying patterns as merchants stock up in December.
Dollar weakness patterns: December has historically been the dollar's weakest month, with negative bias from 22 December onwards. Gold's inverse correlation to the dollar could provide upside momentum during this period.
Real yields environment: With the Fed cutting rates to 3.5-3.75 per cent while inflation remains around 3 per cent, real yields stay relatively low, potentially supporting higher gold valuations.
Central bank accumulation: Continued central bank purchases and year-end institutional portfolio rebalancing could provide additional support.
December has historically been the most bullish month for EUR/USD, with the world's most-traded currency pair posting an average return of +1.2 per cent over the past 50 years.
The US dollar regularly shows clear weakness during the Santa rally period, particularly from 22 December onwards. However, the Fed's hawkish rate cut has provided some dollar support this year.
Key drivers:
Holiday liquidity dynamics: Lower institutional trading volumes during the holiday period reduce dollar support as retail traders and smaller participants dominate. Thin markets can amplify moves in either direction.
Year-end rebalancing: European and Asian investors often repatriate funds or rebalance portfolios at year-end, creating demand for non-dollar currencies that typically support EUR and AUD against USD.
Dollar strength from hawkish Fed: The Fed's December rate cut came with guidance of fewer cuts in 2026. This has kept the dollar elevated despite lower rates, possibly limiting the ability of EUR/USD seasonal patterns to influence the market.
Consumer discretionary and retail stocks historically outperform during the holiday period, with the sector averaging 1.9-2.1 per cent gains during the Santa rally window. Holiday shopping accounts for 30-40 per cent of annual retail revenue for many companies, making this period crucial for full-year performance.
Key drivers:
Record holiday traffic: A record 202.9 million consumers shopped during the Thanksgiving-Cyber Monday weekend, up from 197 million in 2024. November spending surged 3.8 per cent year-over-year, with total holiday spending projected to exceed US$1 trillion for the first time.
High-income shoppers trend: Value-oriented retailers (TJX, Five Below) and those with strong omnichannel presence are capturing a disproportionate share of value over retailers targeting low-middle income earners.
Post-Fed tailwind: The December rate cut provides marginal relief through lower borrowing costs, potentially extending holiday spending into late December as credit becomes more accessible.
5. Bitcoin
Bitcoin's December performance has been highly inconsistent, with a median return of -3.2 per cent, contrasting with traditional Santa rally patterns. Currently, Bitcoin is trading around US$87,500, down approximately 30 per cent from its October all-time high of US$126,210.
However, there are signals that the historically volatile asset could see a Santa-led bounce this year.
Key drivers:
Institutional infrastructure in place: More than US$120 billion is now held in spot Bitcoin ETFs, which provides a framework that could support capital flows if risk sentiment improves, although inflows are not assured.
Pro-crypto policy expectations: Discussion around potential developments such as a US strategic Bitcoin reserve and the CLARITY Act could influence sentiment going into 2026, although outcomes remain uncertain.
Four-year cycle inflection point: The recent sell-off came roughly 18 months after the most recent Bitcoin halving, a point linked to turning points in some past cycles, with the four-year narrative potentially influencing market behaviour.
The December Fed meeting delivered a 25 basis point cut, but the hawkish tone has set expectations for fewer rate cuts in 2026.
The Nasdaq's 19 per cent YTD gain has pushed valuations to elevated levels as AI-stock sentiment begins to dip.
Five companies account for 30 per cent of index returns, placing portfolio concentration at concerning levels.
Reduced holiday liquidity amplifies both moves and risks. Thin trading volumes can create exaggerated reactions to headlines, particularly around geopolitical events or economic data.
Is Santa coming to town?
The Santa Claus rally remains one of the better-known seasonal patterns in financial markets, but a historical hit rate of around 72 per cent also implies meaningful years where it does not play out.
A more balanced way to view the Santa rally window is as one input among many.
Seasonal observations can be considered alongside technical levels, fundamental drivers, and risk management — particularly given how quickly sentiment can change in thin holiday conditions.
And, if you can, take time away from the screens and enjoy the break.
Rare earth and strategic metals equities have been among the stronger-performing thematic areas in 2025, though recent price action suggests the rally has paused as investors reassess momentum. REMX has rebounded sharply from its April lows and is now consolidating below a technically significant resistance zone near $75, making it a key level to monitor.
What is REMX?
REMX is an exchange-traded fund that provides diversified exposure to global companies involved in mining, refining, and recycling rare earth and strategic metals. For traders and investors who want sector exposure without relying on a single issuer, the ETF structure can help spread company-specific risk. Performance will still be highly sensitive to commodity cycles and policy/geopolitics.
Portfolio snapshot
The ETF’s larger positions typically include a mix of rare earth producers and lithium-related names. Examples of top holdings (approximate weights, based on the fund’s most recent publicly available holdings data)
Why rare earths and strategic metals matter
Rare earth elements (a group of 17 metals) are not necessarily scarce in the earth’s crust, but economically viable deposits—and especially processing capacity—are concentrated. This creates a supply-chain dynamic where policy decisions, trade restrictions, and downstream demand can have outsized impacts on pricing and sentiment.
Industrial catalysts (refining and emissions control)
Technical outlook
After marking multi-year lows around $33 in early April, REMX rallied strongly and returned to levels last seen in mid-2023. The $75 area stands out as a prior multi-touch support zone (2021–2023), which increases the probability it acts as resistance on the first approach.
REMX weekly chart
Price has repeatedly tested $75 over the past month without a confirmed breakout. The pattern of higher lows against flat resistance resembles an ascending triangle, often associated with building pressure; however, confirmation requires a decisive break.
REMX daily chart
Scenarios to watch
Bullish continuation: A daily close above $75 (ideally with expanding participation) would shift focus to $81 as the next resistance zone.
Range continuation / pullback: Failure to clear $75 again keeps the risk of a retracement toward $68 support.
Bearish breakdown: A sustained move below $68 would weaken the structure and raise the probability of a deeper mean reversion (next support levels should be mapped from prior swing lows).
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