EURUSD World Bank expects a slowdown in the EU economy – 12 January 2022

EURUSD World Bank expects a slowdown in the EU economy

EURUSD World Bank expects a slowdown in the EU economy. The European currency remains under pressure, and the EUR/USD pair trades unstably, correcting within a sideways trend around 1.1373.

According to the renewed January report of the World Bank, in 2022, the growth rate of the world economy will decline to 3.2% after growing by 4.1% in 2021. EU GDP growth forecast dropped from 4.4% to 4.2%, although in 2021, it climbed 5.1%. Among the main reasons for the negative dynamics, the bank calls the high degree of spread of the Omicron coronavirus strain and an increase in the growth rate of world inflation.

Data on the volume of industrial production in the EU will be published today. According to analysts, the indicator will decline to 0.6% from 3.3% a month earlier, putting additional pressure on the euro.

The USD Index declines, reaching the lower border of the global corridor at 95.500. Investors reacted negatively to the statement of the head of the US Federal Reserve Jerome Powell during a speech in Congress, who noted that high current inflation was a consequence of a disruption in supply chains that led to an imbalance in supply and demand, and this process would be regulated on its own. In these words, some experts caught the official’s reluctance to tighten monetary policy soon.

Support and resistance

On the global chart, the price moves within the local Flag trend continuation pattern, the implementation of which has not yet begun. The fluctuation range of the EMA on the Alligator indicator has narrowed almost completely, while the histogram of the AO oscillator remains close to the transition level.

Resistance levels: 1.1437, 1.1650.

Support levels: 1.1269, 1.1100.

EURUSD World Bank expects a slowdown in the EU economy

GBPUSD the US dollar went down – 11 January 2022

GBPUSD the US dollar went down

GBPUSD the US dollar went down. The GBP/USD pair moves within an uptrend around 1.3588 amid a statement by British Prime Minister Boris Johnson about a possible reduction in the quarantine period from seven to five days.

According to the official, the UK showed success in the fight against the Omicron strain, but the hospitalization rate is still unacceptably growing. The government announced that people could come out of quarantine three days earlier if they test negative for coronavirus twice. The reluctance of the authorities to introduce a new lockdown and tighten the existing quarantine measures instills optimism in investors. Macroeconomic statistics for December were also positive. Following the manufacturing sector, Construction PMI was also better than expected, reaching 54.3 points against the expected 54.0 points. British Retail Consortium (BRC) retail sales rose by 0.6% YoY with an expected 0.3% growth.

USD Index began to decline slightly after staying above 96.000 for the holiday weekend and is now at 95.800. Investors react to the recent poor labor market data, assessing the prospects for a change in the course of the US Federal Reserve’s monetary policy in early spring. This week, consumer prices data will be released, and inflation will intensify. According to analysts’ forecasts, it may exceed 7% YoY, which has not happened for more than forty years.

Support and resistance

The asset moves within the global downtrend channel, preparing to overcome the resistance line. Technical indicators keep a global buy signal: fast EMAs on the Alligator indicator are above the signal line, and the AO oscillator histogram forms upward bars in the buy zone.

Resistance levels: 1.3666, 1.3835.

Support levels: 1.3496, 1.3171.

GBPUSD the US dollar went down

GBPUSD British currency is trying to grow 07 January 2022

GBPUSD British currency is trying to grow

GBPUSD British currency is trying to grow. GBP/USD is developing the upward trading dynamics against the background of the depreciation of the US dollar and is currently at around 1.3546.

The pound quotes reacted with growth to the statements of British Prime Minister Boris Johnson that the high rates of revaccination of the population make it possible to avoid severe restrictive measures and the introduction of a lockdown is not planned in the near future, despite the fact that the UK, like many other European states, is faced with another wave of coronavirus caused by the Omicron mutation. According to Johnson, an increase in the incidence will be observed in the coming weeks, and the load on the national health system will increase significantly, but the country, in his opinion, will be able to overcome the fourth wave of the epidemic without resorting to quarantine.

The authorities’ refusal to tighten sanitary standards has inspired investors, who hope that the epidemiological situation will not affect the pace of economic recovery. The pound was also supported by the December data on business activity indices: in the services sector, the indicator was 53.6 points, which is higher than the 53.2 points predicted by analysts, as well as the composite PMI index, which showed absolutely identical values.

The positions of the US dollar slightly corrected after the indicator of Initial Jobless Claims again exceeded the threshold of 200K, amounting to 207K against the background of 197K expected by analysts. The number of Continuing Jobless Claims also increased to 1.754M, higher than the market’s preliminary estimates of 1.688M. The final data on Nonfarm Payrolls are due today and if the number of jobs falls below the forecast, the US dollar may continue the downtrend.

Support and resistance

GBP/USD is trading within the global downtrend channel, having approached the resistance line. Technical indicators are holding a signal to open long positions: the fast EMAs of the Alligator indicator is above the signal line, and the histogram of the AO oscillator is trading in the buy zone, forming ascending bars.

Support levels: 1.3487, 1.3200.

Resistance levels: 1.3610, 1.3838.

GBPUSD British currency is trying to grow