Recovery The information presented in this publication is provided to you purely for informational purposes and does not constitute investment advice, an offer to sell, or a solicitation to buy, and should in no way serve as a basis or be considered as an incentive to engage in any investment. The macro point RecoveryThe macro pointLet's focus on the good news that has come in recent days at the macroeconomic level. The political turmoil surrounding President Trump's impeachment has had no impact on the foreign exchange market. Traders have instead focused on the third stimulus plan in the United States, the outlines of which were sketched out by the Biden administration at the end of last week. Amounting to several trillion dollars, this plan targets both businesses and households (through the implementation of a helicopter money mechanism, meaning direct payments to households). It also includes a significant component dedicated to infrastructure, particularly with a view to combating climate change. This new fiscal support comes at the right time, as the pandemic continues to grow, and the U.S. Federal Reserve's leeway to further support the economy is rather limited. With such sums expected to be injected into the economy in the coming months, it is likely that the recovery in activity across the Atlantic will be much more robust than in Europe. On the pandemic front, there is an acceleration of the vaccination process almost everywhere, including in France. Let's remember that the faster we reach the herd immunity threshold (set between 60% and 75% of the total population), the faster the return to normal from an economic perspective will occur. The goal for all governments is to ensure that the variant of the virus discovered across the Channel does not spread, which would necessitate the implementation of even more drastic social restriction measures, similar to the lockdown in England. Fortunately, the latest studies show maintained vaccine effectiveness against this new variant. Let's also add that a recent study conducted on a sample of 400,000 Israelis who received the first vaccine dose showed a 33% reduction in coronavirus infections among this population fourteen days after receiving the first dose. This is further proof of the effectiveness of vaccines approved by health authorities. Even though we are not completely out of the crisis yet, the end of the tunnel is near. Thanks to constant fiscal and monetary support, we can hope that once the pandemic is under control, we will experience a strong economic rebound, thus avoiding too long-lasting scars of the crisis on both household purchasing power and the ability of businesses to invest and hire. Technical point On the foreign exchange market, there is little movement in the major pairs. Late last week, a massive drop in trading volumes was observed in the G10 currency pairs (referring to the world's ten leading economies). On Thursday's session, traded volumes collapsed by nearly 50% compared to the average of the previous five sessions. The same observation for Friday. This calm on the currency market certainly reflects the fact that everything has already been 'priced in,' meaning integrated into the prices offered by the market. Whether it's the restrictions, the outlook for recovery, or the Biden administration's measures. In this context, there was a slight decline in the EUR/USD pair on a weekly basis. The consolidation movement underway in the euro could lead the pair to its December lows, around the 1.2065-1.2059 zone in the short term. For now, the technical configuration suggests a continuation of consolidation.The supports and resistances displayed below indicate the respective low and high points within which prices should evolve during the week.SUPPORTSWEEKLYRESISTANCESWEEKLYS2S1R1R2EUR/USD1.20651.20981.23161.2411EUR/GBP0.87000.87270.90850.9157EUR/CHF1.06001.06691.08631.0905EUR/CAD1.51501.52071.56261.5743EUR/JPY123.01123.98127.69128.31For personalized advice on exchange rate trends and hedging, contact our trading room: Announcements to follow This week is busier on the macroeconomic front than the previous two. Two central bank meetings are on the agenda. First up is the Bank of Canada, which will kick off in the middle of the week with a monetary status quo expected by consensus (rate maintained at 0.25%). For now, even if part of Canada is nearly back to lockdown, no new monetary measures are planned. Next, the European Central Bank (ECB) will follow, with a similar monetary policy status quo expected. Since the crisis began, the ECB's role has been to ensure sufficient liquidity supply to the market, allowing states and companies to continue borrowing at the lowest possible rates. Needless to say, this goal was successfully achieved. Given the bond market's evolution, no new ECB action is necessary at present. In most countries, monetary policy is now on standby. It's time for fiscal policy, following what’s being done across the Atlantic, to take over in this final stretch of definitively exiting the crisis. More on the margins, we also note President Biden's inauguration on January 20th, in a ceremony which could be marked by incidents, following recent tensions at the Capitol.Below you will find publications and events expected to have a major impact on the evolution of exchange rates.DAYTIMECOUNTRYINDICATORWHAT TO EXPECT?19/0111:00ZEW Economic Sentiment Index (January)Decline expected to 45.5 from 55.0 previously.20/0116:00Monetary policy decisionReference rate maintained at 0.25%.21/0113:45Monetary policy decisionStatus quo expected by the market.22/0109:30Manufacturing PMI (January)Expansion expected with a figure of 56.4, slightly down from the previous month.Did you like this content? Share it!