Dollar rallied on Tuesday due to the slight increase in US Treasury yields. But by afternoon, price retreated, returning some of its gains in the market.

Today, although many already expect the Fed to maintain its super-soft monetary policy, investors and traders will focus on the accompanying statements that may signal a shift in the plans for bond purchases. Last meeting, the central bank said they will keep the cost of borrowing at the current level, at least until the economy reaches full employment and inflation does not exceed 2.0%. However, an improvement in the situation on the labor market and vaccination may result in an earlier withdrawal of incentive measures.

Nonetheless, judging by what is happening in the market, bullish traders will not give up and will continue to push the euro above 1.2090. Doing so will bring the quote to 1.2135, or even towards 1.2180. But if the bears manage to drag the euro down to 1.2050, the price will drop to 1.2000 and 1.1940.

On a different note, the Prime Minister of France, Bruno Le Maire, called on the European Union to speed up disbursements under its EU Recovery Fund. Le Maire and his German counterpart, Olaf Scholz, have presented to the European Commission a clear plan on how to utilize the fund, conferring that the money should be used to invest in priority areas, combat climate change and support digital development. France expects to get approximately € 40 billion ($ 48 billion), while Germany, whose economy has been the least affected by the pandemic, is expected to receive nearly € 30 billion. Italy will receive the largest grant, but the exact amount is not yet known.

But recently, Finland said something in the plan dissatisfied them. Most likely, it is the amount of grants and loans to be given to the country, so the government declared that they will not rush to approve it.

The EU plan is very important as it would help accelerate economic recovery in the midst of the global coronavirus pandemic. Political analysts said the fund is also a test of whether Europe can work as a whole to save its economy.

On the topic of taxes, France and Germany announced that they support the US proposal to make the minimum tax of multinational companies to 21%. This can significantly accelerate the approval of the bill, even despite some resistance from a number of European countries. The proposal was put forward last year, but the Trump administration flatly refused to consider it. Today, under the new administration of Joe Biden, there is a real chance to introduce higher tax levies from the world's largest companies.

Germany also revised its macroeconomic projects for this year. According to the report, GDP will jump to 3.5% due to increased consumer spending and gradual lifting of quarantine restrictions.

In the US, the Conference Board said consumer confidence peaked at its highest level since February 2020, jumping 121.7 points this April. Unfortunately, it did not drive dollar demand up.

Italy also saw improved consumer confidence this April. According to the report, the index rose to 102.3 points instead of the expected 102.0 points.

GBP

Pound rallied yesterday due to the report that UK retail sales grew very strongly in April. The index jumped to 20 points, obviously better than its previous figure of -45 points. Sales are expected to remain above seasonal levels in the coming months since the impact of COVID-19 restrictions should gradually wear off. Sadly, retailers will continue to face problems related to inventory due to supply chain disruptions.

Today, the pound is expected to trade sideways unless the bulls manage to push the quote above 1.3920. If this happens, GBP/USD may jump to 1.3970 and 1.4020. But if the bears successfully bring the pound down to 1.3860, then the price will collapse to 1.3810 and 1.3750.