Hello, dear traders! On Wednesday, the EUR/USD pair made a reversal in favor of the European currency and returned to the correctional level of 161.8% at 1.1357. The rebound of the quotes from that level will work in favor of the US currency and will resume falling towards 1.1250. Notably, a week ago the pair left the sideways channel, in which it had been staying for more than a month. However, currently it is in it again. This week, the information background is extremely weak. Today, the EU inflation report was published. It showed a value of 5.0% yoy, which coincided with the expectations of traders. Therefore, the euro got neither support nor pressure. However, there are no significant events in the EU at the moment. All discussions in the currency market are held about the monetary policies of such central banks as the Fed, the Bank of England and others. However, this list does not include the ECB as Christine Lagarde has repeatedly said over the past few months that rates would not be raised.
The ECB has also not given traders any signals about an early end of the stimulus program. The regulator has already defined its strategy and left no choice for traders to maneuver. Currently, there is nothing to assume otherwise from what members of the ECB board stated. Therefore, all traders' attention is focused on the Fed's policy due to lack of information background this week. The Fed's plan seems to be clear too, however it is a bit doubtful. Traders expect a complete curtailing of the stimulus program in March, though it is not a 100% deadline. Traders are waiting for the first interest rate hike in March, however that does not mean that all Fed board members will vote for it. Traders expect at least three rate hikes in 2022, however the COVID-19 pandemic could make adjustments to those plans. The Fed will take necessary measures to lower inflation from a record 7%, however it may fail. Therefore, these judgments and questions allow for other alternatives. Currently, traders are bullish on the Fed's hawkish policy. It is the reason why the dollar is again rising.
On the 4-hour chart, the pair performed a reversal in favor of the US currency and fixed under the correctional level of 127.2% at 1.1404. Therefore, the quotes may continue to fall towards the correctional level of 161.8% at 1.1148. There is also a sideways corridor on the 4-hour chart, and the pair returned to it. It is highly probable that traders will have to work hard to break out of it again.
US and EU economic news calendar:
EU - Consumer Price Index (10-00 UTC).
US - Number of Initial and Repeated Jobless Claims (13-30 UTC).
On January 20, the EU and US economic calendars contain one entry each. The EU inflation was irrelevant for traders and the US report will be ignored by traders. Thus, the information background will not have any impact on the EUR/USD pair today.
EUR/USD outlook and recommendations for traders:
New sales of the pair are possible if a clear close below the trend line with a target of 1.1357 on the hourly chart is carried out. Now these trades can be kept open with the target of 1.1250. I recommend buying the pair, if the closing above the sideways corridor on any chart will be completed.