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01.03.2021: EUR and GBP may continue dropping against USD.

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At the beginning of this trading week, investors showed quite high activity after the US House passed the $1.9 trillion coronavirus relief package on Saturday. At the same time, investors avoid buying the euro ahead of the speeches of some ECB’s representatives, including Christine Lagarde. The officials will provide their speeches later today. Notably, today, traders do not ignore macroeconomic reports. Thus, the final data on the eurozone manufacturing PMI turned out to be higher than the preliminary estimates. Nevertheless, the euro continued falling after the extremely weak report on the French inflation. Investors are waiting for Germany’s inflation figures that will help them to predict tomorrow’s eurozone statistical data. According to the forecast, inflation in Germany will remain the same. Notably, economists had expected that in France and Spain the indicator would rise. However, the real data showed a decline. That is why Germany may face the same situation. As a result, the euro will remain under pressure until the inflation report is released. If the predictions come true and Germany’s inflation remains unchanged, the euro will have all chances to recoup some of its losses. However, if the country’s inflation slows down, the euro will continue losing in value. At the same time, the pound sterling only slightly reacted to the really weak data on the UK lending market. Of course, the currency went on falling, but at a significantly slower pace. During the last five months, the UK lending market decreased by £6.2 billion. There are still no reasons for the market recovery. However, the UK manufacturing PMI data offset this disappointing report. The fact is that the manufacturing PMI exceeded the forecast like in the eurozone. At the moment, market participants are waiting for Germany’s inflation figures, which are likely to shape investors’ sentiment. This report will be followed by the US manufacturing PMI data that is expected to drop. However, the indicator may also beat the forecast. In this case, the US dollar will advance even more. The euro/dollar pair has been losing in value since Thursday after hitting the resistance level of 1.2230. The euro has already lost about 170 pips reaching the level of 1.2050. Analyzing the current trading chart, we can see that the quote is sliding at a slower pace repeating the situation recorded on December 9 and January 18 and 27. If the price fixes below 1.2050, it may decline towards 1.2000-1.1950. However, the pair may also show a rebound as it did it before. The pound/dollar pair traded near the peak of the mid-term trend for a long time. However, it found the resistance level between 1.4180 and 1.4220. After that, the pair stopped and lost more than 300 pips. On the trading chart, we can see that the quote is hovering near the limits of the psychological level of 1.3950. This may lead to the fluctuation between the levels of 1.3900 and 1.4000. Trading solutions will depend on the price fixation. If the pair fixes below 1.3887, the local low logged on Friday, it may slide to 1.3750. At the same time, if the price consolidates above 1.4050, it may jump towards 1.4100-1.4150.

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