It's Getting Complicated The information presented in this publication is provided solely for informational purposes and does not constitute investment advice, an offer to sell, or a solicitation to buy, and should not in any way serve as a basis or be considered as an encouragement to engage in any investment. The macro point Macroeconomics is beginning to show signs of weakness. In the United States, several statistics have disappointed traders in recent sessions. Weekly unemployment claims (which are the only real-time indicator for understanding the job market) rebounded sharply last week, from 231,000 to 286,000. Analysts' consensus had expected a decrease to 220,000. December retail sales also dropped significantly by -1.9% compared to an expected decline of -0.1%. This signals a negative outlook for growth dynamics. Finally, the University of Michigan's confidence index also fell in January, and December's industrial production contracted (albeit slightly). This underperformance of the U.S. economy seems primarily attributable to the new pandemic wave linked to Omicron. However, one cannot rule out that the almost generalized rise in prices is also starting to penalize economic activity. It is suspected that households and businesses are beginning to struggle with inflation close to 7% (which could continue to grow in the coming months). Inflation has even become a sensitive political issue in the United States. U.S. President Joe Biden has clearly called on Federal Reserve (Fed) Chairman Jerome Powell to act to prevent inflation from being persistent and harming GDP growth. This validates the scenario of a very near rate hike by the Fed and the end of asset purchase tapering next March. On this side of the Atlantic, inflation remains the main focus. Inflation in the eurozone was confirmed in the latest reading at 5% in December compared to 4.9% in November. It's a record high. In Spain, inflation over the same period reached a peak since 1990 (at 6.7%). The minutes of the ECB's December meeting did not surprise. The institution no longer considers inflation to be temporary (difficult to maintain such a stance given the figures). However, its central scenario for the evolution of inflation is optimistic. It expects eurozone inflation to fall below 2% by the end of the year. Few analysts share this view. Many point out that energy-related inflation will fade but that observable inflation in services will take over. For the moment, the ECB does not plan to act. It remains steadfast. On the currency market, the euro lost some ground against the U.S. dollar over the weekly variation. This is mainly due to a more generalized strengthening of the greenback against its other major counterparts over the past week (USD increased by 0.81% against the British pound, 0.88% against the Mexican peso, among others). The dollar benefits notably from the current market turmoil (CAC 40 index fell by 1.22% last week). The EUR/USD remains in a short-term indecision zone from our perspective. During Friday's session, the euro rebounded on the 1.1300 zone. But the resulting upward movement lacks strength (60 pips rebound). A break above the 1.1400 zone would be needed to consider that the pair is now in a medium-term upward channel. In the longer term, our view has not changed for the euro. The rise in U.S. rates and the monetary policy status quo will favor a durable decline in the EUR/USD towards the 1.10 zone by the end of the year. The supports and resistances displayed below indicate the respective low and high points within which the rates should evolve throughout the week.SUPPORTSWEEKLYRESISTANCESWEEKLYS2S1R1R2EUR/USD1.10971.12301.14971.1631EUR/GBP0.82000.82790.84260.8499EUR/CHF1.01601.02681.04091.0590EUR/CAD1.39861.41041.43341.4445EUR/JPY126.98128.03132.22134.84The coming week will be interesting. Several statistics will allow us to adjust our macroeconomic scenario for the coming months. Germany will publish the IFO business climate index and the manufacturing PMI for January. The eurozone's largest economy showed significant signs of fragility in the fourth quarter. The most pessimistic economists have even talked about the risk of technical recession in 2022. It's too early to know. But these new figures will help determine if the German economy is recovering slightly or remains in trouble. Central banks will also be at the rendezvous. The Fed meeting should be without surprises. However, following the pressure from the White House, Jerome Powell might be tempted to be firmer in his resolve to fight inflation and raise rates during his press conference. This could cause some ripples on exchange rates, especially USD pairs. The Bank of Canada will meet on the same day as the Fed. The majority of analysts forecast a first rate hike next March. But a minority does not rule out that it could happen this week given the very good employment dynamics and the maintenance of a high inflation level. It's an event on the agenda that could potentially cause a lot of volatility. Therefore, it is essential to adopt the right hedging strategy if you are exposed to the CAD. Below you will find publications and events that are expected to have a major impact on currency rate developments.DAYTIMECOUNTRYINDICATORWHAT TO EXPECT?01/2409:30Manufacturing PMI (January)Slight decline to 56.8 from 57.4 previously.01/2510:00IFO Business Climate Index (January)Increase expected by consensus to 95.3 from 94.7 previously.01/2616:00Central Bank MeetingA minority of traders expects an increase in the key rate from 0.25% to 0.50%.20:00Central Bank MeetingMonetary policy status quo expected. But J. Powell's press conference from 20:30 could provide valuable insights on rate developments.01/2714:30First GDP Estimate for Q4Analysts' consensus expects an increase of 5.8% compared to 2.3% previously.