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21.02.2021: European session - EUR stands still in anticipation of ECB meeting: outlook for €/$, £/$

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The common European currency is standing still in anticipation of the outcome of the meeting of the European Central Bank, while the pound sterling is extending gains. Moreover, the British currency has risen to its two-and-a-half-year peak without any fundamental factors which could cause volatility.
Today’s macroeconomic calendar is bereft of any important releases from Europe. The market may become volatile only after the American session opens. At the same time, it is quite obvious that the decision of the ECB will affect all currencies of the world, including the sterling. Therefore, the pound’s rally is purely speculative in nature. This means that you should not give in to the temptation and take a risk.
After all, yesterday's data on inflation in Europe leaves the ECB no choice. The regulator will most likely announce another quantitative easing plan. However, these measures will hardly be taken earlier than spring. Nevertheless, in order to avoid panic in the markets, the ECB is expected to prepare investors in advance for ultra-loose monetary policy. In any case, this will lead to a steep fall in the common European currency, triggering a decline in other currencies. The fact how far they may drop remains in question. The only thing that can make a difference is the lack of Christine Lagarde’s comments on monetary policy strategy and the quantitative easing program. However, amid five-month deflation, it will be difficult to ignore this issue.
Today, traders are awaiting the data on jobless claims from the United States, but unemployment estimates are rather grim. Economists predict that continuing claims may top 5.5 million. Thus, the US labor market continues to lose steam, as the unemployment rate remains high.
Initial jobless claims are expected to drop by 50,000, but this will not offset a surge in continuing claims. Besides, initial claims are of much less importance than continuing ones. However, jobs data is set to be published simultaneously with Christine Lagarde's press conference. This means that this news will take a back seat.
After rebounding from the local low of 1.2059, the euro/dollar pair returned to the boundaries of the 1.2130/1.2170 range, which negatively affects the volume of long positions.
From a technical point of view, traders should further monitor the price dynamics near the 1.2130/1.2170 range. In doing so, it will be possible to predict the pair’s further movement.
In simple words, if the price consolidates below 1.2100 on the four-hour chart, the volume of short positions is likely to increase. In case the price consolidates above 1.2180 on H4, the volume of long positions will grow.
As for the British currency, the price has hit a new local high in the medium term. To confirm a buy signal, the quotes must consolidate above 1.3750 on the daily chart. In this case, the way to the levels of 1.3900-1.4000 will open. (*)
Otherwise, the price is likely to return the area below the 1.3700 mark.


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