FX.co ★ The EU and UK authorities will take over household expenses

The euro and the pound adjusted slightly after yesterday's regular update of annual lows against the US dollar. The news that European households can count on at least 375 billion euros in state aid has put investors' nerves in order. According to European politicians, this amount will help to compensate for the colossal electricity bills this winter, but there is a risk that this, as always, will be extremely small.

It is obvious that after reducing Russian gas supplies, wholesale prices will remain much higher than historical norms. According to analysts, in August, the average price for electricity offered to consumers in the largest European countries was 67% higher than a year ago. The price of gas immediately increased by 114%. The coming winter will be gloomy for the entire European continent. In the UK, which already has the highest electricity costs in Europe, bills are expected to rise by about 178% in winter.

According to the Bruegel analytical agency, the total bill for European governments is approaching the 379 billion euro mark. In all likelihood, it will grow if the market interventions of the European Union do not bring results.

In the same UK, the incoming Prime Minister Liz Truss has developed plans to fix annual electricity and gas bills for an ordinary British family at or below the current level of 1971 pounds sterling. During discussions with her team and officials recently, Truss has decided on a mechanism to prevent a sharp increase in electricity bills, which should begin next month. To the new British Prime Minister, this policy could cost up to 130 billion pounds over the next 18 months.

Electricity bills in the UK were expected to jump by 80% from October to 3,548 pounds. According to the plans developed by the Trails team, this pricing regime will actually be canceled. Instead, ministers will set a new unit price that households will pay for electricity and gas. On this news, the British pound compensated a little for the Monday morning trading losses.

As it became known, negotiations were held yesterday with the heads of energy companies. They took this idea positively, allowing companies to avoid several taxes. The price that energy companies will be allowed to charge consumers will be set by ministers and will likely be reviewed quarterly

As for the technical picture of EURUSD, despite the pair's recovery, the risk of further sharp decline remains quite high, as trading is conducted below parity. Bulls need to cling to 1.0000 – the level that bears try to defend with all their might. Without this, it will be very problematic to expect a further recovery of the trading instrument. Going beyond 1.0050 will give confidence to buyers of risky assets, opening a direct road to 1.0090. The furthest target will be level 1.0130. In the event of a decline in the euro, buyers will probably show something around 0.9940. But, having missed this level, you can say goodbye to the upward correction, as there will be talk of a continuation of the bear market, which can push the euro to 0.9880 and 0.9830.

The pound is still below the 16th figure, creating certain difficulties for buyers. There is little chance of a major upward correction, especially if the bears take back 1.1550. Buyers now need to do everything to stay above this range. Without doing this, you can see another major sell-off to the level of 1.1490. Its breakdown will open a direct road to 1.1440 and 1.1410 – the lows of 2020, which was updated at the height of the coronavirus pandemic crisis. It will be possible to talk about a correction only after fixing above 1.1600, allowing the bulls to count on a recovery to 1.1680 and 1.1750.