EUR/USD: Widening gap between the US dollar and Euro

Analysts said that serious problems in the EUR/USD pair are caused by an imbalance between both currencies. Bank of America experts point to the excessive overvaluation of the US dollar and the lack of attention to the euro.

Before the Fed meeting, the issue of a fair assessment of the euro and the US dollar is extremely relevant. According to Bank of America reports, the US currency turned out to be overvalued by investors this month, while the euro is undervalued. Analysts believe that this upsets the balance in the EUR/USD pair.

The calculations by Bank of America's currency strategists demonstrate that the current greenback estimate is 0.7 points higher than the long-term average, while the euro is 1.1 points lower. These indicators are negatively affected by rising inflation expectations in the United States (up to 6%) and extremely high inflation, which has reached peak values for the last almost 40 years. The current situation increases the degree of tension between the US dollar and the euro. On Wednesday morning, the EUR/USD pair experienced noticeable volatility, trading around the level of 1.1270.

By the middle of this week, the US dollar maintained its growth, unlike the euro amid expectations of the most important Fed meeting. Despite the growing tension, the dynamics of the American currency are almost unchanged in relation to other key currencies. The euro, on the contrary, has to make a lot of efforts to stay afloat. Experts are afraid of increasing dissonance in the EUR/ USD pair, although there are no serious prerequisites for this.

In anticipation of the Fed meeting, many analysts turned to the Fed's updated dot forecast, the so-called dot plot. Experts carefully analyze the data presented in order to predict the rate of increase in the key rate in 2022. According to the previous dot plot published in September 2021, the federal funds rate should be increased once (until December 2022). However, a lot has changed now, so the markets are confident that in the coming year the rate will be raised twice (25 bp at each meeting).

Bank of America experts believe that the regulator is able to surprise the markets and raise rates following the meeting on Wednesday, December 15. The implementation of such a scenario will lead to a shock and force you to radically rebuild. On the contrary, if the completion of the asset purchase program goes twice as fast, that is, it will be completely curtailed in March 2022, then the markets will remain calm. It can be recalled that this option is the most expected.

At the same time, there is a possibility of another scenario: if the regulator does not raise rates at the current meeting, then it will have to be done twice (by 0.50%) in March next year. The reason for this decision is the overheating of the US labor market. Therefore, most market participants expect the regulator to raise rates in the second half of 2022. At the same time, many investors do not rule out a weakening of inflation next year, despite the persistence of price pressure.

A surprise for the market may be the updated December "dot" forecasts of the Fed (dot plot), which allow for the probability of a threefold rate hike in 2022. The implementation of such a scenario will help the US dollar strengthen its position, but stock markets will be under pressure.

Forecast for AUD/USD on December 17, 2021

Yesterday, the Australian dollar traded in a range of 80 points, it closed the day by gaining 15 points, which is not very impressive with the fall of the US dollar index by 0.36%. At the moment, the price is between two levels: 0.7171 and 0.7227. Now the breakthrough above the upper level of the 0.7227 range will open the target along the MACD line at 0.7285, consolidating below 0.7171 can send the price to the 0.7065 level, which was not reached at the beginning of the week.

On the 4-hour chart, the Marlin Oscillator formed a divergence with the price. At the moment, the price is staying above the balance indicator line (red moving one), which retains the bulls' advantage. The situation turns out to be twofold, therefore the technical signal levels 0.7171 and 0.7227 acquire the main attention and the main role. The bears' first target at 0.7130 is the MACD line on H4.

US indices closed lower

The Dow Jones Industrial Average fell 1.48% on Friday and ended trading at 35365.44 points.

Standard & Poor's 500 dropped 1.03% to 4620.64 points.

Meanwhile, the Nasdaq Composite lost less than 0.1% to 15169.68 points.

By the end of the week, the Dow fell 1.7%, the S&P 500 fell 1.9%, and the Nasdaq Composite fell 3%.

Earlier this week, the Federal Reserve System (FRS) decided to accelerate the pace of winding down its asset-buying program and signaled its readiness to raise rates several times next year. In addition, the Bank of England was the first among the world's leading central banks to raise its key rate to 0.25% from 0.1%.

Meanwhile, Andrew Brenner of NatAlliance Securities believes that the sharp decline in the US stock market was caused rather not by fears of tightening monetary policy, but by other reasons. In particular, he points out that Friday was the so-called Quadruple Witching Day, when index and stock futures and options expire. On this day, there is often increased volatility in the market.

A strong decline on Friday was demonstrated by securities of financial companies. Quotes from Goldman Sachs Group Inc. fell 3.9%, while JPMorgan Chase & Co. fell 2.3%, quotations of the payment system American Express Co. fell 1.8%, quotations of Visa Inc. dropped by 1.2%.

General Motors shares tumbled 5.5% on news of the unexpected resignation of Dan Amman, head of the self-driving car business.

American chain restaurant operator Darden Restaurants fell 5%. The company released strong quarterly earnings, but gave a weak annual forecast and said its CEO, Eugene Lee, will step down next May.

Johnson & Johnson's capitalization fell 2.8% after the US Centers for Disease Control and Prevention (CDC) recommended that citizens get vaccinated with Pfizer or Moderna coronavirus vaccines instead of J&J vaccines because of the risk of blood clots.

Meanwhile, FedEx Corp. jumped 5% in trading after one of the world's largest transportation and logistics companies beat market expectations in adjusted earnings and revenues and improved its full-year forecast.

US shares higher at close of trade; Dow Jones up 1.60%

At the close in New York, the Dow Jones climbed 1.60%, the S&P 500 gained 1.78% and the NASDAQ Composite rose 2.40%.

In the leaders of growth among the components of the Dow Jones at the end of today's trading were shares of Nike Inc, which rose in price by 9.65 points (6.15%), to close at 166.63. Boeing Co rose 5.86% or 11.04 points to end at 199.52. American Express Company added 3.22% or 5.02 points to close at 160.91.

The biggest losers were Merck & Company Inc, which fell 1.14% or 0.87 points to end the session at 75.54. Verizon Communications Inc rose 0.58% or 0.31 points to end at 52.78, while Johnson & Johnson was down 0.32% or 0.54 points to 167. , 21.

The growth leaders among the S&P 500 index components at the end of today's trading were Citrix Systems Inc, which gained 13.63% to 95.05, Micron Technology Inc, which gained 10.54% to close at 90.68, and also Expedia Inc, which was up 9.14% to end at 177.27.

The biggest losers were General Mills Inc, which fell 4.03% to close at 65.06. The Kroger Company shed 3.60% to end the session at 43.87. Pfizer Inc was down 3.39% to 58.95.

The leaders of growth among the components of the NASDAQ Composite index at the end of today's trading were shares of Reliance Global Group Inc, which rose in price by 78.69% to the level of 5.450, Biofrontera Inc, which gained 44.75%, to close at 11.03, as well as shares IsoPlexis Corp rose 40.82% to end at 6.90.

On the New York Stock Exchange, the number of shares that went up (2,671) exceeded the number of those that closed in the red (604), while the quotes of 88 shares remained practically unchanged. On the NASDAQ stock exchange, 2889 companies rose in price, 880 declined, and 215 remained at the level of the previous close.

Aldeyra The shares fell to a 52-week low, shedding 50.91%, 3.63 points to trade at 3.50. Biofrontera Inc rose to an all-time high, gaining 44.75%, 3.41 points, to trade at 11.03. DBV Technologies shares fell to historic lows, down 48.52%, 1.310 points, and ended trading at 1.390. CytomX Therapeutics Inc fell to a 52-week low, down 40.00%, 2.580 points to trade at 3.870.

The CBOE Volatility Index, which measures the value of S&P 500 options trading, was down 8.13% to trade at 21.01.

Gold Futures for February delivery was down 0.28% or 5.05 to $ 1,789.55 a troy ounce. Elsewhere, WTI crude for February delivery rose 3.92%, or 2.69, to $ 71.30 a barrel. Futures contract for Brent oil for February delivery was flat 0.00%, or 0.00, to trade at $ 74.03 a barrel.

Meanwhile, on the Forex market, the EUR / USD pair was up 0.02% to hit 1.1286, while the USD / JPY was up 0.01% to hit 114.10.

The US Dollar Index Futures was down 0.10% at 96.445.

Pound sterling reached the high and the small pullback was not critical

The British currency has confidently moved to the next peaks by the end of this week and successfully reached its high. A slight decline did not prevent it from enjoying the victory, which is not the last in the list of this currency.

Yesterday, it managed to rise to a one-month high against the US dollar amid improved risk appetite as concerns about the Omicron coronavirus strain eased. On this wave, the British currency reached the psychologically significant level of 1.3400 and further moved up. Such growth was recorded for the first time since November 23 of this year in view of the US dollar's temporary collapse. According to MUFG Bank analysts, the increased risk appetite negatively affected the American currency and gave a head start to the British one. However, they believe that the prospects for raising interest rates in the United States in 2022 will significantly support the USD.

The pound tried to rise previously, especially before the meeting of the Bank of England. Short bursts of growth did not make significant changes in the dynamics of the pound. However, the situation has now stabilized. On Friday morning, the GBP/USD pair was around the level of 1.3404, but could not hold its gained positions and remained in the range of 1.3392-1.3393.

Analysts said that the pound has risen to the upper border of the wide range, wherein it has been since this month started. Many experts believe that the current dynamics of this currency are caused by technical rather than macroeconomic factors. Analysts pay attention to the overbought GBP, the fact of which is putting pressure on buyers. The current situation forms the so-called "swing" between sellers and buyers. This contributes to the transition of the GBP/USD pair into a downward spiral, where the nearest target is the level of 1.3290.

Meanwhile, the UK's macroeconomic data did not affect the dynamics of the pound very much. Some of them, particularly the rates of economic growth, were revised upward (from the previous 23.6% to the current 24.2%). UK GDP data for the third quarter of 2021 turned out to be slightly worse than forecasted, but quite acceptable – economic growth slowed down by 6.8%. A relatively calm economic environment favorably influenced the dynamics of the pound. According to analysts, the closest prospects for the pound look positive. Based on January 2022 forecast, the British currency may rise.

Trading plan for starters of EUR/USD and GBP/USD on December 28, 2021

Here are the details of the economic calendar for December 27, 2021:

The macroeconomic calendar was empty yesterday, and it was a non-working day in the UK. As a result, market activity was quite low – currencies mostly stood still.

Analysis of trading charts from December 27:

The EUR/USD pair is moving within the upper border of the side channel 1.1225/1.1355, where the wide amplitude has been replaced by a narrow one. This may signal the process of accumulation of trading forces before a new price increase.

The GBP/USD pair locally updated last week's high of 1.3436, but this did not lead to drastic changes. The quote remained in the same place. This confirms the formation of stagnation, which may become a catalyst for trade forces in the long term if new speculative surges are observed.

Despite a fairly strong price growth, there is still a downward trend relative to the daily period. The upward movement may be classified as a correction.

December 28 economic calendar:

Today is not much different from the past. It is still a non-working day in the UK due to the celebration of "Boxing Day". Among the statistical indicators, only the S&P/CaseShiller housing price index in the United States can be noted, which is expected to fall from 19.1% to 18.5%. It is unlikely that the data will affect anything in the market.

Trading plan for EUR/USD on December 28:

The stagnation within the upper border of the flat may be replaced by a decline if the rebound trading method is executed. A signal to sell the euro will appear in the market when the price is kept below the level of 1.1300. This step will lead to the quote's decrease towards the area of 1.1265 - 1.1225.

An alternative scenario of market development considers the tactics of breaking the upper border of the flat. In this case, the euro will receive a short-term signal towards the 1.1400 level. The main signal about the change of trading forces will appear in the market after the price holds above the level of 1.1400 in the daily period.

Trading plan for GBP/USD on December 28:

It is impossible to exclude price surges that will lead to the end of stagnation since there is a high speculative interest in the market. So, traders consider local buy positions above the level of 1.3450 in a four-hour period. This may lead to a prolongation of the correction course in the direction of 1.3510.

The downward trend scenario will become relevant when the price holds below the level of 1.3370. This will lead to a decline towards 1.3290.

A candlestick chart view is graphical rectangles of white and black light, with sticks on top and bottom. When analyzing each candle in detail, you will see its characteristics of a relative period: the opening price, closing price, and maximum and minimum prices.

Horizontal levels are price coordinates, relative to which a stop or a price reversal may occur. These levels are called support and resistance in the market.

Circles and rectangles are highlighted examples where the price of the story unfolded. This color selection indicates horizontal lines that may put pressure on the quote in the future.

The up/down arrows are the reference points of the possible price direction in the future.

Bitcoin's indefinite direction this 2022

Bitcoin begins this year with cautious growth, wobbling on the edge of declining again. Nevertheless, many experts are optimistic about its prospects.

Most analysts are confident that the first cryptocurrency will rise this month. Crypto market experts agree that the first month of the new year will lay the foundation for Bitcoin's growth. According to preliminary calculations, it is likely to grow during the first quarter of 2022. This is facilitated by the activity on the part of institutional investors.

For the last seven years, the years 2020 and 2021 turned out to be the most favorable for the cryptocurrency industry. Bitcoin's price growth during the reporting period was 22%. It can be recalled that from 2015 to 2019, January was characterized by a decline for BTC. According to preliminary estimates, the average decline in digital assets over the years was 17%. At the same time, the average market rate of Bitcoin did not exceed $ 29,000 in early January 2021. The peak price of the leading crypto asset reached $69,000 in November 2021. Later, BTC collapsed by 53%, to $ 28,805. Fortunately, buyers regained their previous losses during the second quarter of the past year, although Bitcoin failed to retain its recovered positions after that. By the end of 2021, the yield of the first cryptocurrency was 72%.

The digital asset ended at around $47,500 during the previous year. On Monday, the BTC/USD pair was around the level of $46,921. It should be noted that at the end of December 2021, Bitcoin was trading at $ 46,300, unsuccessfully trying to rise. Over the past month, it decreased by 19%, which turned out to be one of the worst results since December 2011.

The first cryptocurrency started to fall when the Fed announced its decision to curtail the asset purchase program. The Fed's course of tightening monetary policy hit Bitcoin hard, which plunged noticeably and remained in a downward trend until the end of 2021.

It is usually cautious in the first month of the new year since traditionally, January is not considered a very positive month for this cryptocurrency. Many analysts fear the onset of the crypto winter, during which BTC will lose the major share of its value. In the event of a strong correction of risky assets, experts warn that it will decline to $ 10,000. Three factors can act as a catalyst for the crypto winter: a decrease in the activity of institutional investors, the introduction of national cryptocurrencies (CBDC) by many countries, and the struggle of regulators with the revolutionary blockchain technology sector – GameFi.

However, most experts expect an upward turn in the industry and believe in Bitcoin's prospects. This is facilitated by the high restorative power of Bitcoin and the belief in innovative means of payment as the money of the future. The short and medium-term planning horizon for Bitcoin is also encouraging. Under favorable circumstances, experts summarize that it may be in the range of $72,000 - $75,000 in the first half of 2022.

Pound sterling achieved new records

As January begins, the British currency decided to keep up with the American one and achieve new records. The pound has now succeeded in its plans, but experts warn about the temporary nature of its growth.

The pound began the new month of the new year by reaching price highs. On Tuesday, it approached two-year highs against the European currency and slightly fell amid the strengthening of the US dollar (by 0.12%, to 1.3464). This was facilitated by a prolonged rise in the cost of government bond yields amid growing expectations about the Bank of England's rate hike. According to preliminary calculations, the interest rate increase will occur next month.

The current situation gave impulse to the pound, which it successfully used. On Wednesday morning, the GBP/USD pair was trading at the level of 1.3527, regaining previous losses and heading towards new levels. However, experts are worried that the pound will not be able to hold on to the reached positions in the mid-term and will plunge again.

Many economists believe that the growth of the pound and the GBP/USD pair will be temporary if inflation in the US and UK accelerates. Currently, the British economy is growing at a slower pace than the American one. The reason for this is the Fed's decisive action on key issues related to stimulus cuts and multiple rate hikes in 2022. As for the Bank of England, it is not planning any radical changes in its monetary policy in the near future. At the moment, the key interest rate of the Fed and the Central Bank of England is at the same level – 0.25%.

If the British regulator refrains from further tightening monetary policy and raising rates, then the pound's growth will be questionable. On the other hand, the Fed's hawkish actions are helping the US dollar's growth, which will continue in 2022. The multi-directional monetary strategies of the Fed and the Bank of England create prerequisites for a decline in the GBP/USD pair in the coming year.

The current superiority of the pound is explained by several factors, including the Bank of England's sudden increase in rates recorded in December 2021, and the refusal of the British authorities from new restrictive measures. According to British Prime Minister Boris Johnson, the new mutation of the Omicron coronavirus is much milder than other strains. Market participants expect a two-fold increase in rates by the Bank of England. It is possible that the rate will be increased by 15 basis points (bp) by the March meeting of the regulator. By the end of this year, experts do not exclude an additional increase. According to economists, the Bank of England will continue this strategy in 2023.

Economic activity in the UK has remained stable for several months. According to the latest PMI reports, production in the country in December 2021 grew at a faster pace than expected. This inspires the markets with optimism and allows them to make positive forecasts. During the reporting period, the number of jobs fell slightly, but this was offset by an increase in the volume of new orders and an increase in production. Analysts' concern was caused by a significant increase in prices, increasing fears about a new round of inflation.

The current turmoil did not stop the pound's rally, which peaked at the level of 1.4212 in May last year. However, it was brought down by the unexpected decision of the Bank of England in December not to raise interest rates. Against this background, it declined to the lows of 2021 (1.3200), but later recovered. Currency strategists at DBS Bank expect the GBP/USD pair to remain in a low range of 1.2800-1.3300 this year.

The factors slowing down the rate hike by the regulator may be the problems associated with Brexit, as well as difficulties in the trade negotiations between London and Brussels. It is possible that if the negotiations fail, the British government will apply Article 16 and start a trade war with the EU. The implementation of such a scenario would jeopardize the stability of the British economy and national currency. However, analysts hope to reach a compromise in the course of mutually beneficial trade cooperation.

US shares mixed at close of trade; Dow Jones Industrial Average down 0.45%

At the close in New York, the Dow Jones shed 0.45%, the S&P 500 shed 0.14% and the NASDAQ Composite shed 0.05%.

In the leaders of growth among the components of the Dow Jones at the end of today's trading were shares of Intel Corporation, which rose in price by 1.77 points (3.31%), to close at 55.21. Merck & Company Inc added 2.58% or 2.07 points to end trade at 82.37. UnitedHealth Group Incorporated rose 1.40% or 6.40 points to end at 465.00.

The biggest losers were Nike Inc, which fell 4.16% or 6.53 points to end the session at 150.44. Boeing Co shares were up 2.87% or 6.19 points to end at 209.31, while Visa Inc Class A was down 2.30% or 4.99 points to 211. , 97.

The leaders of growth among the components of the S&P 500 index at the end of today's trading were shares of Moderna Inc, which rose in price by 9.28% to the level of 233.70, Humana Inc, which gained 6.06%, to close at 385.18, as well as shares Hologic Inc, which were up 4.47% to end at 73.45.

The biggest losers were Take-Two Interactive Software Inc, which fell 13.13% to close at 142.99. Cardinal Health Inc shed 5.92% to end the session at 51.03. Estee Lauder Companies Inc was down 5.36% to 335.89.

The top gainers among the components of the NASDAQ Composite index at the end of today's trading were shares of Bone Biologics Corp, which rose 57.14% to reach 5.39, Zynga Inc, which gained 40.67% to close at 8.44, and Molecular Partners AG ADR shares rose 30.22% to end at 21.50.

The biggest losers were TDH Holdings Inc, which fell 81.86% to close at 0.740. Kidpik Corp shares lost 27.47% and ended the session at 4.75. Rapid Micro Biosystems Inc was down 21.23% to 7.20.

On the New York Stock Exchange, the number of securities that fell in price (2052) exceeded the number of those that closed in positive territory (1186), while the quotes of 158 shares remained practically unchanged. On the NASDAQ stock exchange 2,493 companies fell in price, 1,368 increased, and 206 remained at the level of the previous close.

Take-Two Interactive Software Inc fell to a 52-week low, down 13.13%, 21.61 points to trade at 142.99. TDH Holdings Inc fell to a 52-week low, down 81.86%, 3.340 points to trade at 0.740. Kidpik Corp's shares fell to historic lows, down 27.47%, 1.80 points, to close at 4.75. Molecular Partners AG ADR rose to all-time highs, up 30.22%, 4.99 points, to close at 21.50. Rapid Micro Biosystems Inc fell to historic lows, down 21.23%, 1.94 points to end at 7.20.

The CBOE Volatility Index, which measures the value of S&P 500 options trading, was up 3.41% to trade at 19.40.

Gold Futures for February delivery was up 0.21% or 3.85 to $ 1.801.25 a troy ounce. Elsewhere in commodities, WTI crude for February delivery fell 0.62%, or 0.49, to $ 78.41 a barrel. Futures contracts for Brent oil for delivery in March were unchanged 0.00%, or 0.00, to trade at $ 81.02 a barrel.

Meanwhile, on the Forex market, EUR / USD was up 0.03% to hit 1.1327, while USD / JPY was flat 0.00% to hit 115.20.

The US Dollar Index Futures was up 0.23% at 95.938.

US stock indicators rose on inflation data

The Dow Jones Industrial Average rose 38.3 points (0.11%) to 36,290.32 points. Standard & Poor's 500 increased by 13.28 points (0.28%) - up to 4726.35 points. The Nasdaq Composite added 34.94 points (0.23%) to 15,188.39 points.

Papers of the pharmaceutical company Biogen Inc. fell by 6.7%. The U.S. government said Medicare will only cover the cost of Alzheimer's drug Aduhelm for early-stage patients enrolled in clinical trials. The share price of Eli Lilly & Co., which is developing a similar drug, fell 2.44%.

The cost of the health insurance company Humana Inc. rose by 0.92%. The company will launch a $1 billion share buyback as part of the $3 billion buyback program announced last February.

Meta Platforms Inc. (formerly Facebook) has appointed Tony Xu, head of food delivery service DoorDash Inc., to the company's board of directors. DoorDash shed 2.1%, while Meta lost 0.3%.

The manufacturer of surgical robots and systems Intuitive Surgical reported that revenue in October-December, according to preliminary data, reached nearly $1.55 billion, which is 17% higher than the same period in 2020. However, the company's share price fell 1.5%.

Bank Jefferies Financial Group Inc. in the 4th quarter of 2021 recorded revenue of $1.81 billion, which is 3% less than in the same period last year. The indicator also turned out to be worse than analysts' forecasts, who estimated it at $1.9 billion. Quotes of the bank's papers fell by 9.3%.

Satellite provider Dish Network Corp. rose by 2.8%. The New York Post, citing informed sources, said the company is in talks to merge with DirectTV.

Cost of Caterpillar Inc. rose by 1.1%. Analysts at UBS Bank increased the target price of the company's shares to $250 from $235 per share.

Consumer prices (CPI) in the United States soared 7% last month compared to the same month in 2020, according to data from the country's Department of Labor. The pace of growth has become the highest in 40 years - since June 1982.

Inflation accelerated from 6.8% in November and was in line with analysts' forecasts.

Capitol Securities Management economist Kent Engelk noted that despite the fact that the indices ended trading below the highs of the session, the market showed signs of relief, as inflation was in line with forecasts.

According to experts from RBC Capital Markets, inflation will continue to accelerate in early 2022, stabilize and begin to slow down in the second quarter, they believe. But the Fed will most likely feel pressure from rising prices and will be forced to make a decision to raise (rates) already at a meeting in March.

US dollar is looking for support to rise again

The US dollar started the new week with multi-directional dynamics. It remains between two contradictory actions. In such a state, experts say that it is difficult for the US currency to rise, but there is also no reason for it to decline.

At the end of last week, the above-mentioned currency surprised the markets by making sharp multi-directional movements in an attempt to consolidate with the status of a protective asset. However, these efforts were unsuccessful. Currently, the US dollar has regained some equilibrium, although some unorganized dynamics remain.

The Fed's hawkish intentions regarding multiple rate hikes this year have contributed to the US dollar's multi-directional movements. Against this background, it held to the previous rebound in the EUR/USD pair, as investors included several rate increases in its price. Experts said that the aggressive rhetoric of the regulator contributes to a sharp strengthening of the US dollar, combined with an increase in the yield of US Treasury bonds. The current yield on ten-year Treasuries has risen from the previous 1.772% to 1.793%. Experts believe that this provides additional support to the US currency.

On Monday morning, the EUR/USD pair was trading in the range of 1.1418-1.1419, trying to rise slightly. However, it is hard for it to reach new peaks right now.

Experts note the predominance of the "bearish" mood in the EUR/USD pair, which was facilitated by the breakdown of the mirror level of 1.1465 last Friday. At this point, the bulls are trying to control the situation. Their offensive will be successful if the levels of 1.1478 and 1.1529 are reached. However, the "bullish" scenario is likely to be canceled if the bears consolidate at the support level of 1.1401. In this case, the path towards the levels of 1.1353 and 1.1285 will be open.

According to experts, multiple increases in the Fed's interest rates in 2022 are necessary to avoid overheating the US economy. If overheating occurs, financial crises are possible, which will have a devastating impact.

Markets are still worried about the extremely high level of US inflation (7% in annual terms). According to preliminary estimates, this is three times higher than the pre-pandemic. The reasons for this growth are active monetary stimulus, the disruption of supply chains amid COVID-19, and problems in the US labor market, including higher wages due to a shortage of workers and more frequent job changes.

Experts consider raising the interest rate of the Fed as one of the main ways to curb US inflation. Most market participants expect this in March 2022, although some expected it to rise at the next meeting of the regulator, scheduled for January 26. Analysts admit that the Fed's strategy may be more aggressive than expected. The implementation of such a scenario will direct inflation downwards, but will significantly affect US economic growth.

Currently, the US currency is trying to rise and consolidate in an upward trend. However, these actions are held with varying success. Concerns about its further decline are provoked by the rising bearish mood on the EUR/USD pair. Traders built up positions for three weeks to buy the US dollar, and then changed tactics to the opposite. Throughout the previous week, large investment funds have reduced USD purchases by 5%. Experts conclude that the continuation of the current trend contributes to the US dollar's further decline.

Trading plan for starters of EUR/USD and GBP/USD on January 19, 2022

Here are the details of the economic calendar on January 19, 2022:

The only news in the macroeconomic calendar yesterday was the indicators on the UK labor market, which came out not bad at all. Here, the unemployment rate declined from 4.2% to 4.1%. At the same time, the number of applications for benefits in the period of December fell by 43.3 thousand, with a forecast of 38.6 thousand.

Only the employment data have a different result. It only rose by 60 thousand against the predicted growth of 125 thousand. Meanwhile, the growth of wages slowed down from 4.9% to 4.2%, which is noticeably worse than the forecast of 4.3%. This served as clear negativity in the report.

As a result, the overbought pound did not react in any way to the report on the labor market and continued to decline.

In terms of the information flow yesterday afternoon, reports began to arrive about a sharp increase in COVID-19 cases in Germany. This was the impetus for speculation in the market, which led to a sharp weakening of the euro.

January 19 economic calendar:

The UK's inflation data was published today at 7:00 Universal time, where it rose from 5.1% to 5.4%, with a forecast of 5.2%. Rising consumer prices once again prove that the Bank of England will continue to raise interest rates.

During the US trading session, the construction sector data of the United States will be published. The number of building permits issued, as well as the volume of construction of new homes, is expected to fall.

This is not the best signal for the US economy, but it is still unknown whether this will be a signal for the US dollar to sell-off.

Trading plan for EUR/USD on January 19:

There is currently a small pullback, which is more like a price stagnation in the range of 1.1310/1.1335. Therefore, it is worth considering an acceleration strategy, where the current stagnation will serve as a lever in the market.

We concretize the above details into trading signals:

Sell positions should be considered after holding the price above 1.1340 with the prospect of moving to 1.1370.

Sell positions should be considered after holding the price below 1.1310 with the prospect of moving to 1.1280.

Trading plan for GBP/USD on January 19:

In this situation, a stagnation-pullback relative to the level of 1.3600 is possible. This move is still considering the possibility of resuming upward inertia, which will lead to a complete change of trading interests.

At the same time, to prolong the correction, it is enough to stay below the level of 1.3570. This step will open up the possibility of a recovery move towards the level of 1.3450.

Robinhood will launch cryptocurrency wallets

The company's blog posts on Thursday revealed that Robinhood Markets Inc is deploying cryptocurrency wallets for 1,000 users, allowing them to send and receive cryptocurrencies through their brokerage accounts.

Last year, the Menlo Park-based online brokerage laid out plans to start testing cryptocurrency wallets with a goal to wider use in 2022.

Out of the 1.6 million people on the crypto wallet waiting list, the top 1,000 can now exchange their cryptocurrency from Robinhood for external crypto wallets.

The new feature also connects digital asset owners to the blockchain ecosystem.

According to the company's terms, Beta testers will have a daily limit of $2,999 for total withdrawals and 10 transactions. They will also need to enable two-factor authentication.

Robinhood plans to expand the program to 10,000 customers by March 2022.

Robinhood's customers have long been asking for cryptocurrency wallets, which allow them to participate more broadly in blockchain-based ecosystems to be able to buy virtual assets such as non-fungible tokens (NTF) on the Ethereum network.

The company will be required to report fourth-quarter earnings on January 27.