The US dollar suddenly strengthened against its competitors after weakening for several times.
In terms of the economic calendar, a lot of statistics for the United States was published yesterday, which acted as an impulse to buy the US dollar.
All statistics were published simultaneously at 13:30 Universal Time.
First, it is worth noting the second estimate of the US GDP in the fourth quarter, where the rate of economic recession was expected to slow down from -2.8% to -2.5% (y/y). However the actual slowdown of the recession amounted to -2.4%, which pleased the investors.
After that, the data on orders for durable goods played an important role in the US dollar's strengthening. The previous indicator was revised up from 0.5% to 1.2%, and the data for January came out ahead of the forecast, rising by 3.4%.
The package of statistical data is completed by the weekly publication on applications for unemployment benefits, which recorded a reduction in their volume, coinciding with the forecast.
The volume of initial applications for benefits declined from 841 thousand to 730 thousand, taking into account the better revision of the previous figures – from 861 thousand to 841 thousand.
The volume of repeated applications for benefits also fell from 4,520 thousand to 4,419 thousand.
What happened on the trading chart?
The EUR/USD pair, which initially showed an active upward interest, sharply changed its direction, returning the quote to the area of the recent stagnation 1.2120/1.2160. The reversal coincides with the publication of US statistics. It is worth considering that the recent growth, which was used to break through the resistance level of 1.2190, did not remain without traders attention.
The GBP/USD pair showed a sharp downward interest in the market, with a scale of more than 250 points. The downward trend almost coincided with the publication of US data. It should be noted that unlike the euro, the pound is extremely overbought in the market due to the prolonged upward movement. So, the current correction is only a small part of the possible decline.
Trading recommendations for EUR/USD and GBP/USD on February 26, 2021
Any particular important statistical data will not be released today. Therefore, the market will continue to trade based on speculative interest and technical factors.
Looking at the current trading chart of EUR/USD, the quote is seen moving in the area of 1.2120/1.2160. If the area puts pressure on sellers, the volume of short positions will be lowered. The next manipulations in the market can be expected if the price is kept outside of one or another border of the 1.2120/1.2160 range, which will indicate the quote's further direction.
As for the trading chart of GBP/USD, one can observe that the quote has already managed to break through the area of the psychological level of 1.3950/1.4000/1.4050. If the price holds below 1.3950 level, the pound may further decline towards the area of 1.3800-1.3750.