The Roadmap is Set The information presented in this publication is provided for informational purposes only and does not constitute investment advice, an offer to sell, or a solicitation to buy, and should not be used or considered as an incentive to engage in any investment. The macro point The minutes of the December meeting of the U.S. Federal Reserve were full of insights for traders last week. They were released last Wednesday and outlined the main points of the evolution of U.S. monetary policy for the coming months. The Omicron variant was mentioned nine times. However, the members of the Board of Governors unanimously believe that it will not derail the economy. This aligns with the latest scientific studies confirming that the variant is less severe than Delta. They also consider that the American economy is strong and that the labor market is close to full employment. The latest statistics on job creation in December (ADP private employment report and Labor Department report) prove it. Despite the rebound of the pandemic, American employment is doing very well. The unemployment rate is now at 3.9%. This was the long-awaited signal for the central bank to begin a rapid monetary tightening. Two levers should be activated: an increase in the key interest rate and a reduction of the balance sheet. The central bank anticipates at least three rate hikes of a quarter point each this year. A fourth increase is not excluded if inflation continues to rise, according to some central bank members. Additionally, the reduction of the balance sheet size is another tool to combat inflation. It might be faster than during the 2017-2019 period. The immediate effects of such a measure are a decrease in available liquidity and a resurgence of volatility in financial assets, including currencies. In theory, the combination of rate hikes and a decrease in the balance sheet size should favor the U.S. dollar over other currencies this year.In the eurozone, monetary policy is not as clear. The president of the European Central Bank, Christine Lagarde, indicated that a first rate hike is not on the agenda for 2022. But not all members of the Board of Governors share the same view. Last Wednesday, the governor of the central bank of Latvia, Mārtiņš Kazāks, hinted that the institution could act if inflation remains high. This view is shared by several northern eurozone countries (e.g., Germany and the Netherlands). Intense discussions are certainly expected at the next Board of Governors meeting in early February regarding the diagnosis of inflation and the monetary policy tools that might be mobilized. For now, the lack of clarity in the European Central Bank's monetary policy has no notable effect on the euro exchange rate. The EUR/USD pair remains close to 1.13.In emerging countries, the trend of rising interest rates continues. Poland led the way. As expected by traders, the central bank increased its main interest rate by 50 basis points to 2.25% last week. This is the fourth increase since mid-2021. More will occur in the coming months given the level of inflation (which could peak at 8% this year according to experts!). Following the announcement, the EUR/PLN (euro/Polish zloty) pair collapsed close to its October 2021 lows, around 4.65. The downward trend remains in the short term. Other central banks in the Eastern European region are also on a monetary tightening cycle that has been underway for several months.In the forex market, volatility remains contained on the main pairs for the time being. The EUR/JPY and EUR/GBP have moved within a narrow range, respectively 160 points and 80 points. On its side, the EUR/USD fluctuated last week, still close to the 1.12-1.13 zone. The pair is in an indecision zone. There is not much to do immediately. A close above 1.1370 today could allow a breakout towards 1.14 (and especially the resistance at 1.1422). Conversely, if the pair breaks the 1.1215 level, we could have a new downward impulse.The supports and resistances shown below indicate respectively the low and high points within which the prices should evolve during the week.SUPPORTSHEBDORESISTANCESHEBDOS2S1R1R2EUR/USD1.11121.12151.14221.1526EUR/GBP0.81000.81990.84510.8536EUR/CHF1.03001.03571.05001.0563EUR/CAD1.40771.42371.44731.4556EUR/JPY127.71128.28132.44134.02The coming week will be mainly dedicated to U.S. statistics. We will closely monitor the latest inflation figures for December in the United States. The Consumer Price Index is expected at 6.8% year-on-year (excluding volatile elements, inflation is forecast at 4.9% - still very high compared to pre-pandemic levels). Furthermore, the Producer Price Index could reach 0.4% on a monthly basis. If so, it would be good news compared to 0.8% in November. This would indicate a decrease in inflationary pressures in international trade and raw materials. However, caution is needed. These two statistics will obviously guide the members of the U.S. Federal Reserve.Below are the publications and events that should have a major impact on the evolution of currency rates.DAYTIMECOUNTRYINDICATOREXPECTATIONS?12/0114:30Core CPI (December)Increase of 0.5% month-on-month (stable compared to November).13/0114:30Producer Price Index (December)Sharp decline expected, to 0.4% month-on-month (compared to 0.8% in November).14/0114:30Retail Sales (December)Consensus at 0.3% month-on-month (stable compared to November).