Markets' attention will be focused on a political event, namely the inauguration of the 46th US President J. Biden, whose role is important in the currency market. And although investors have already used the topic of his inauguration, there are still risks that some people who do not agree that Biden won the election legitimately will do an act of disobedience.

In addition to this event, the results of the Central Bank of Canada's meeting on monetary policy will attract attention. However, changes are not expected – the key interest rate is expected to remain at 0.25%, but investors will be interested in the regulator's view on the future policy in the context of the continuing impact of COVID-19 in Canada and the coming to power of the new US president, whose policy quite strongly affects its Northern neighbor.

The release of updated data on consumer inflation in the UK and the Eurozone will also be interesting. In the UK, the indicator is expected to rise both on an annual and monthly basis, respectively from 0.3% to 0.5% and from -0.1% to 0.2%. As for the Eurozone, it is expected to stagnate in annual terms at + 0.2% and rise by 0.3% in monthly terms, against the December decline of 0.3%.

It is clear that there will be a serious reaction to these important macro indicators of the BoE and the ECB. The European regulator may react to these figures at its meeting tomorrow, and not only to the events related to the COVID-19 pandemic. In turn, the British Central Bank will later respond to its own.

Yesterday, the markets were closely watching J. Yellen's speech in Congress. She talked about a lot of important things to local deputies such as the entire spectrum of fiscal policy. However, investors want something different. They need her statement and expectations on monetary policy. She reported the need to keep interest rates low for a significant period of time. In this regard, it is important to note the reaction of the US government debt market, which was mixed. The yield of 10-year treasuries remained almost at the same levels, but the 2-year notes, which are sensitive to the possible dynamics of changes in the level of interest rates, declined.

All this points to the lack of a clear opinion of the markets regarding the Fed's real actions. The market believes that the growth of US inflation may force the FRS to begin lowering the volume of bond purchases, despite their promises not to change anything in monetary policy. Such factors will result in continuing their sales, and therefore increasing yields. In this case, the US dollar will receive support and the market's general view for this year's prospects may entirely change.

Today, we believe that the market will either rise on the wave of Biden's inauguration or most likely consolidate, both in anticipation of the ECB meeting and further prospects about the previously announced stimulus measures by the new government.

Forecast of the day:

The EUR/USD pair is trading above the level of 1.2140. A consolidation above it may lead to a continued local growth to 1.2215.

The USD/CAD pair is moving in the range of 1.2630-1.2800, while waiting for the Central Bank of Canada's decision on monetary policy. We believe that the pair will further decline to the level of 1.2630 after falling below 1.2700.