FX.co ★ Biden to launch new stimulus for the US economy. World Bank criticizes EU approach to vaccination

Euro plummeted yesterday after the publication of very strong data on the US economy. According to the report, the labor market has recovered sharply, which the Federal Reserve wanted.

On a different note, US President Joe Biden said he will launch his long-term economic recovery plan next week, which includes more support to the population, particularly to middle class families. It also incorporates a significant increase in infrastructure investments, which will strengthen the US position against China and several other countries. Aside from that, rumors say the new ambitious program will take on problems with the environment, especially with the climate. About $ 400 billion is expected to be allocated to this issue.

"Serious support is being prepared for the health sector and changes in the tax system," Biden said.

The expected changes in the tax system are:

• Increase in the corporate tax rate from 21% to 28%.
• Cancellation of tax incentives for a number of companies with various forms of ownership.
• Increase in the income tax rate for individuals earning more than $ 400,000.
• Expansion of inheritance tax.
• Higher tax rate for individuals whose annual income is at least $ 1 million per year.

Biden will fully present this program next week, during his visit to Pittsburgh.

But while the US is preparing a new stimulus for the economy, the World Bank criticized the EU over its decision to regulate vaccine exports. According to the bank, such an action will not only affect global economic recovery, but could also lead to retaliations from other countries.

Yesterday, former European Commission President Jean-Claude Juncker said waging a war with the UK only jeopardizes the superiority of the EU free trade principles. He claims the EU's approach to vaccination is horrible, while Britain's actions are commendable since they were able to cope much faster when COVID-19 vaccines were introduced.

"I am not in favor of the European Commission's vaccine export authorization mechanism, under which officials would be empowered to prohibit shipments. This could seriously damage the reputation of the European Union, "Juncker said.

With regards to macro statistics, the US Department of Commerce said economic activity in the fourth quarter was much higher than the preliminary estimate, exceeding analysts' expectations. More specifically, US Q4 GDP was at 4.3%, up from the preliminary figure of 4.1%.

At the same time, jobless claims fell to 684,000, down by 97,000 from its level last week.This is the lowest figure recorded since March 14, 2020, and is expected to drop further as economic recovery gains momentum.

The less volatile four-week moving average also declined to 736,000.

As for the EURUSD pair, the bears continue to bend their line, clearly preparing for a breakout from 1.1760. However, this would happen only if the data on the German economy is weak, or if the decisions taken during today's EU Summit are not in favor of the euro. In any case, breaking below 1.1760 will lead to a further drop towards 1.1715 and 1.1680.

But if the quote returns to 1.1802, EUR / USD will trade up to 1.1850 and 1.1930.

With regards to US bonds, which quite recently shook the markets, the situation has straightened out after the meeting of the Federal Reserve System last Thursday. The yield on 10-year US Treasuries is now at 1.614%, after bond purchases dipped a bit