FX.co ★ Trading plan for EUR/USD and GBP/USD on June 22, 2021

There is no doubt that the results of the FOMC meeting produced such a strong effect that the US dollar was instantly overbought. This happened so rapidly that the question of correction passed into the category of rhetorical. Therefore, it is not surprising that the national currency slightly retreated amid a completely empty macroeconomic calendar, as well as the lack of information background. But did that change something? Has the market already fully won back the Fed's decisions? Of course not. These very decisions are so ambitious that they will have a serious impact on the market for quite some time. After all, investors need to prepare for the Fed's increase in the refinancing rate, which will take place next year. Currently, American investors are busy day and night as they are conducting an audit of all their portfolios and re-evaluating risks. It is worth noting that an increase in interest rates will lead to a revaluation of all assets and collateral. Large institutional investors are working on borrowed funds, and an increase in the refinancing rate will lead to an increase in their value. Due to changes in the cost of collateral, many positions will have to be reduced, or even completely closed. It is necessary to do it so that one should not get a loss. However, some of the funds will inevitably return back to the US in the end. Unfortunately, those same institutional investors have scattered so much money around the world that it is simply impossible to pull off all these gestures. We only saw the beginning of this process.

Moreover, it cannot be assumed that the US dollar will resume its growth right now. All sorts of macroeconomic statistics will make their own adjustments, then accelerating it, then slowing it down. Just today, data is being published that may somewhat slow down all these processes. We are talking about home sales in the secondary market, which is expected to fall by 1.0%. This is one of the indicators that characterize consumer activity, on which economic growth depends. Thus, the reduction in sales will have a negative impact on the US dollar. Another thing is that the effect will be extremely insignificant, due to the fact that these data are purely secondary. Anyhow, it is only possible to talk about some growth of the US dollar in a hypothetical way.

Secondary Home Sales (United States):

The EUR/USD pair completed a correction in the area of the conditional high of June 18, where there was a reduction in the volume of long positions and as a result, a reversal. It can be assumed that dollar positions are still relevant among traders, but in this case, a temporary bump relative to the current levels is not excluded.

The GBP/USD pair has similar cycles, where the resistance level is 1.1950. If the resistance level is not broken, sellers will have a chance to recover from the recent correction.