Today, the Fed will hold its first meeting on monetary policy this year. According to the CME futures market, the probability of maintaining the rate is 87.3% - after the rate was reduced three times last year, and then, in response to the crisis in the repo market, an incentive program was launched that "is not at all like QE4". Thus, the Fed has no reason to continue weakening financial conditions.

Nevertheless, the Fed will provide some comments on its further actions. As follows from CME forecasts, markets expect a rate cut in September. These expectations reflect an assessment of the state of the US economy; the need for reinforcing stimulus measures is regarded as low.

At the same time, the US congressional budget Committee (CBO) forecasts that the Federal budget deficit will exceed 1 trillion dollars which is already in the current fiscal year, and public debt growth will become exponential. On the other hand, NWO proceeds from the fact that the US economy is far from a recession. GDP growth in 2020 will be 2.2%, that is, a record increase in budget deficits and public debt - this is a natural course of events for a growing economy.

However, the crisis is only beginning despite the fact that stock indices won back part of the losses due to the panic associated with the coronavirus. January data on consumer spending may decline, which will entail a chain reaction and may provoke a reassessment of the prospects for unsustainable recovery and the return of fears of the global economy slipping into recession.

Under these conditions, the demand for protective assets will remain dominant.

EUR/USD

The euro continues to decline. An attempt was made yesterday to break through the psychological level of 1.10, which ended in failure, but another attempt should be expected in the very near future, given the continued bearish sentiment.

Today, a more pronounced euro movement is possible after the publication of data on the labor market in Germany. The publication of ZEW indexes, which showed some recovery, should receive confirmation from similar studies by Gfk on Friday and IFO on Monday, so that the euro could rely on rising expectations.

Technically, EUR/USD remains under pressure and has every chance to move below 1.10, which can be prevented by a noticeable oversold. On Wednesday, markets have somewhat recovered after active sales at the beginning of the week. This factor is in the hands of the euro. Now, support level is 1.0980 and its testing is probably earlier than corrective growth.

GBPUSD

On Wednesday, the United Kingdom announced its decision on Huawei access to the country's 5G network. At stake are the already unstable trade relations with the United States, especially after disagreements over the digital tax. Moreover, Huawei will be given limited access to the network (that is, there will be no "critical national infrastructure") and market share will be limited.

In addition, Michel Barnier, the EU negotiator for Brexit, continues to argue that it is unrealistic to complete a trade within an 11-month period. He said that both sides would need "much more" time in light of the UK government's insistent statement on "deviating" from EU rules.

In the absence of significant macroeconomic data, the pound continues to follow the market background, losing ground against the dollar. In turn, markets still assess the probability of a rate cut at a meeting on Thursday as relatively high, despite the fact that PMI indices improved markedly in January.

Technically, GBP/USD remains bearish, support 1.2950 / 60 has not yet been broken, and if the Bank of England presents a surprise tomorrow, then exit from the current unstable equilibrium will take place down to the target of 1.29.