FX.co ★ Trading recommendations for starters of EUR/USD and GBP/USD on February 18, 2021

Taking into account the trading charts, it can be noticed that the US dollar's position has been strengthening against its competitors since Tuesday.

The mood change is caused not only by statistical indicators, but also technical ones that signaled a high level of oversold dollars in the market for a long time.

On Wednesday, the UK inflation data was published, where it rose from 0.6% to 0.7%. Given that the slowdown was anticipated, inflation growth could please investors, but the general context of the UK economy's problems is likely to dominate the minds of market participants.

The pound did not make any reaction to the positive news.

By afternoon, US statistics were published. Here, retail sales was expected to slow down from 2.9% to 2.8%, but it surged to 7.43% (y/y) instead. The optimistic flow of data in the United States did not stop there, since the values of industrial production were released a little later. The slowing of the recession is much faster than expected: from -3.15% to -1.82% y/y, with a forecast of -2.7 %.

Due to the above-mentioned data, the US dollar received support. It managed to reinforce its market position.

What happened on the trading chart?

The EUR/USD pair is moving along a downward course from the resistance area of 1.2150/1.2160, wherein a natural price rebound occurred from its limits just recently. Apparently, traders believe that the current downward trend is part of a recovery movement and might prolong the main correction from the high of the mid-term trend.

The GBP/USD pair is still at the peak of the trend, where the psychological level of 1.4000 (1.3950/1.4000/1.4050) acts as a resistance. On the other hand, the current pullback from the resistance area of just over 100 points does not ease the pound's overbought status.

Trading recommendations on EUR/USD and GBP/USD for February 18, 2021

Today, the United States will release its weekly data on claims for unemployment benefits, where their volume is expected to be lowered.

• Volume of initial applications for benefits is forecasted to decline from 793 thousand to 765 thousand.
• Volume of repeated applications for benefits is forecasted to decline from 4,545 thousand to 4,413 thousand.

USA 13:30 Universal time – Applications for benefits

The improvement of the labor market positively influences the exchange rate of the national currency.

Looking at the trading chart of EUR/USD, there is a consolidation-stagnation within the limits of 1.2030/1.2050, which was locally broken in an upward direction during the start of the European session. There is still a possibility that sellers will continue the downward trend, but in order to do so, they need to stay below yesterday's low (1.2023). In such a case, the breakout of 1.2000 level will occur, and the euro will decline to the correction area set at 1.1950.

As for the trading chart of GBP/USD, it can be seen that the quote remains at the high of the trend, where buyers were under pressure from the psychological level.

Now, if we consider the pound's overbought status and the resistance level, a market correction may still possibly happen.

An alternative scenario will take place in the case of keeping the price above 1.4050 level. If so, the speculative hype may push the pound to the maximum region of 2018.