The US dollar felt a local pressure yesterday. As a result, its position weakened in the markets.

The main event in the economic calendar was European Central Bank (ECB)'s meeting, where the regulator expectedly kept the base interest rate on loans at 0%, and the deposit rate at -0.5%.

The Central Bank and its head were expected to talk about specific future actions and words regarding long-term deflation in European Union, however, the regulator did say nothing new. The ECB just reiterated what was reported during the last meeting in December.

The market hardly made a reaction to the ECB meeting, which resulted in a below average activity.

In terms of statistics, there was a publication of weekly values on unemployment claims benefits in the US: the number of initial claims declined from 926 thousand to 900 thousand, against the forecasted decline of 910 thousand. On the other hand, the volume of repeated applications fell by 127 thousand, which was expected to rise by 129 thousand. Thus, this is considered a very good result.

The market did not react to the positive US statistics, maybe because they paid attention more to the ECB meeting.

What happened on the trading chart?

The EUR/USD pair showed an upward interest yesterday, but the movement was still limited to the range of 1.2130/1.2170. The quote slowed down the growth, resulting in an accumulation within the values of 1.2170.

The GBP/USD pair also managed to show an upward interest. The buyers successfully updated the high of the mid-term upward trend, but traders failed to keep their positions above the level of 1.3750. As a result, the price returned again below 1.3700.

Trading recommendations on EUR/USD and GBP/USD for January 22, 2021

Today, the United Kingdom published its retail sales data, where there was growth from 2.4% to 2.9%. However, there was a pessimistic reaction among the market, since retail sales were expected to rise to 4. 0%.

This disappointment of investors led to the pound sterling's weakness.

There will only be preliminary data on the business activity index of Europe, Britain and the United States. In general, a decline is expected.

If we analyze the current trading chart of EUR/USD, the pair can still be seen within the upper border of the range 1.2130/1.2170, while showing an upward interest.

In this situation, it is suggested no to hurry, but wait for the price to consolidate above 1.2190 in the H4 time frame, in order to confirm the upward trend signal. Otherwise, the quote may continue to fluctuate by 10-15 points within the range of 1.3130/1.3170.

As for the current trading chart of the GBP/USD, we can see that the area of 1.3700/1.3750 still puts pressure on buyers, which leads to a price rebound and a hold below the level of 1.3700. The quote must continue to be held below 1.3700, in order for the natural basis associated with the area of 1.3700/1.3750 to continue to be demonstrated in the market through short positions.

The mid-term upward trend will continue if the price is kept above the level of 1.3750 in the daily time frame.