Daily Market Analysis from ForexMart

EUR/USD. February 12, 2021 – The pair consolidates at 1.2100

The EUR/USD pair continues to consolidate in the 1.2100 area. Experts note that the instrument has already strengthened enough for traders to «take a break and look around».

Yesterday was published data on the number of applications for unemployment benefits in the United States: the indicator fell to 793 thousand against the level of last week at 812 thousand, while the forecast assumed a reduction in the indicator to 755 thousand. Analysts note that although statistics on the employment sector are not uniform, there are more and more positive facts in it.

As for the eurozone, here the short-term outlook looks worse than previously thought. According to experts' expectations, the eurozone's GDP in 2021 will grow by 3.8% against earlier expectations of a rise of 4.2%. At the same time, long-term expectations have improved: next year the European economy may grow by 3.8% instead of the previous forecast of 3.0%.

Today you should pay attention to the report on December industrial production in the euro area, as well as preliminary data on the consumer confidence index in the US for February. The forecast assumes growth to 80.8 points from 79.0 points earlier.

EUR/USD. February 15, 2021 – Euro is stable at local highs

The EUR/USD pair continues to hold in positive territory above the 1.2100 level. The current quotation of the asset is 1.2135.

Today in the United States is a day off in honor of the President's Day, so the day promises to be calm. From economic statistics, it is worth highlighting only the publication on industrial production in January in the euro area: the decline in industrial production amounted to 1.6% after an increase of 2.6% mom in December. In addition, a meeting of the Eurozone finance ministers kicks off today. And Germany will publish a monthly economic report.

Friday's statistics from the US showed that the consumer confidence index from the University of Michigan fell to 76.2 points in February against the previous value of 79.0 and the forecast of growth to 80.8 points. Such indicators are the lowest for the last six months. The index of current economic conditions reflected a decline to 86.2 points in February from 86.7 in January. Thus, the US dollar will continue to weaken tomorrow, after the weekend.

EUR/USD. February 16, 2021 – Euro continues to dominate against dollar

The EUR/USD pair continues its ascent on Tuesday. The current quote for the asset is 1.2163. The euro is strengthening, even despite yesterday's weak economic statistics from the eurozone: industrial production in the eurozone in December fell by 1.6% m/m, while the forecast expected a decline of 0.4% m / m. A month earlier, the indicator rose by 2.6% m/m. On an annual basis, the indicator declined 0.8% against the forecast of a decline of 0.3%.

Experts predict that in January and February similar indicators will be relatively similar, but in March the picture should change radically.

Today we should pay attention to the preliminary statistics on GDP in the Eurozone for the IV quarter. The indicator fell by 0.6%, which turned out to be better than the forecasted reduction by 0.7%. On an annualized basis, the region's GDP fell by 5%, which is also better than the forecast of -5.1%.

Also of interest are the data on economic sentiment in Germany from the ZEW: the index rose to 71.2 points, which is better than the forecast of a decline to 59.6. Considering the general weakness of the US dollar on the market and positive statistics from Europe, we can safely expect further growth of the European currency.

GBP/USD. February 17, 2021 – Sterling started to decline from highs

On Wednesday, the GBP/USD pair declines moderately from 1.3950. The current quote for the asset is 1.3890.

The driver of the pound's decline was the strengthening of the US dollar in the market, which received support from a sharp rise in the yield of US debt bonds. However, the British currency does not intend to give up primacy so easily: the sterling receives strong support from the high rates of vaccination in the UK. Experts note that the rate of vaccination of the country's population is much higher than the world average.

Today you should pay attention to the publication of inflation data in Britain. The consumer price index in monthly terms decreased by 0.2%, which turned out to be better than the forecast of decline by 0.4%. Annual inflation in January accelerated to 0.7% from 0.6% in December. Also of interest are data on the price index of British producers: the indicator rose by 0.7%, while analysts predicted growth of 0.5%.

In the US, statistics on producer prices will be published in the same way, as well as on the volume of retail sales. In the evening hours, it is worth paying attention to the data on the volume of industrial production and the publication of the FOMC minutes.

February 18 | Fundamental analysis of oil market

Brent quotes continue to renew multi-month highs: on Thursday, the asset quotes reached $65.40 per barrel. The last time at such marks the price of oil was in January 2020. The current Brent quote is $64.70.

The abnormal cold in Texas, which led to the suspension of the operation of several oil platforms, continues to contribute to the rise in prices. As a result, oil production in the United States fell by 2.6 million barrels per day. Combined with optimism about the rapid spread of vaccines in the world and a decrease in the number of coronavirus cases, this will lead to the fact that the bullish rally in oil prices will continue in the near future.

An additional local factor in the growth of Brent quotes was a report from the American Petroleum Institute (API), according to which US oil reserves fell by 5.8 million barrels over the week. Today you should pay attention to similar statistics from the Energy Information Administration (EIA) of the US Department of Energy. Analysts predict a decline in US oil reserves by 2 million barrels.

However, there are also risks. Experts note that the current rise in prices may lead to a revision of the terms of the OPEC+ deal at a meeting on March 3-4. It is also expected that Saudi Arabia may announce the cancellation of the unilateral production cut of 1 million barrels per day during February and March. In this scenario, the oil market may face a deep correction.

EUR/USD. February 19, 2021 – Euro returns to growth

The EUR/USD pair is again approaching highs: the current quotation of the asset is 1.2140. The pressure on the dollar was exerted by yesterday's data on the number of claims for unemployment benefits in the United States: the indicator rose to 861 thousand against expectations of a decrease to 775 thousand. Such statistics indicate that the labor market in the United States remains unstable.

The data on the real estate market in January was also mixed. The number of building permits issued rose to 1.88 million from 1.70 million, while the number of new home starts fell to 1.58 million from the December level of 1.68 million. American businesses are still uncertain about future demand, despite low interest rates.

Today the macroeconomic calendar is quite diverse. The eurozone presented a preliminary index of business activity in the manufacturing sector for February: the indicator rose to 57.7 (better than the forecast of 54.3 points). A similar index in the service sector fell short of forecasts, falling to 44.7 points against growth expectations to 45.9.

In the evening hours, data on business activity will be presented by the United States. You should also pay attention to the important indicator of sales in the secondary housing market in January, which can demonstrate a local decline in the indicator. The Fed's monetary policy report will be released late in the evening.

EUR/USD. February 22, 2021 – Euro grows weakly from the level of 1.2100

Last Friday, trading closed at 1.2100, and today the pair opens the day with growth to 1.2130. The European currency is supported by strong macro statistics from the Eurozone.

In particular, the February business activity indices of the Eurozone manufacturing sector were published last Friday. The indicator rose to 57.7 points against the forecasted decline to 54.3 points. The composite PMI of the euro zone was 48.1 points, while analysts had expected an increase to 48 points. At the same time, the indicator remains below the level of 50 points for the fourth month in a row, which indicates a decline in economic activity in the region.

On Monday, support for the European currency was provided by the data on the business climate index from IFO in Germany: the indicator rose from 90.3 to 92.4 points. Analysts had expected the index to reach 90.5 points. The index of business expectations in the largest European economy also came out better than forecast, showing an increase from 91.5 to 94.2 points.

The trading day promises to be calm, as the macroeconomic calendar is almost completely empty today. In the evening hours, you should pay attention to the speech of the ECB Heads Christine Lagarde.

GBP/USD. February 24, 2021 – Sterling renews three-year high

The pound sterling continues to confidently renew highs, rising above the 1.42 level. The current quote for the GBP/USD pair is 1.4172. The last time such values ​​were observed at the beginning of January 2018.

The currency was supported by the speech of British Prime Minister Boris Johnson, who noted that he was satisfied with the rate of vaccination and the general epidemiological situation. The prime minister also announced a reduction in quarantine restrictions from March 8. Note that the rate of vaccination in the country today remains the fastest in the world.

Additional support for the British currency was provided by yesterday's data on the labor market in the UK. According to the United Kingdom Office for National Statistics, the unemployment rate rose from 5% to 5.1% in December, better than expected to rise to 5.2%. The number of applications for unemployment benefits fell by 20 thousand against the projected growth of 35 thousand. The average level of wages, taking into account bonuses, increased by 4.7%, experts had expected an increase of 4.1%.

Today you should pay attention to the inflation report from the Bank of England: as a rule, on its basis, the regulator decides on the further course of monetary policy.

EUR/USD. February 25, 2021 – Euro hits local highs

On Thursday, the euro continues to rise, reaching 1.2233. The currency is still supported by macroeconomic statistics from Europe. According to the published data, the German economy grew by 0.3% in the IV quarter of 2020. The economic recovery was driven by the growth of investments (by 1%) and exports (by 4.5%), which offset the decline in consumer spending (by 3.3%) and government spending.

At the same time, a strong pressure on the US dollar was exerted by the speech of the head of the US Federal Reserve before Congress on Tuesday and Wednesday. Jerome Powell noted that the regulator intends to continue a soft policy without raising interest rates for a long period of time. Until inflation reaches the 2% target and employment returns to pre-crisis levels, rates will remain at historic lows.

Another important factor influencing the dynamics of the EUR/USD pair is the issue of agreeing on new fiscal stimulus measures in the United States. The Democrats are slated to pass a $1.9 trillion Senate bailout tomorrow, after which the bill will be sent to President Joe Biden for signature. If the stimulus package is adopted in full, huge cash infusions can accelerate inflation, which will have a very detrimental effect on the US currency.

Brent. February 26, 2021 – «Black gold» is losing ground

The oil market began to correct: Brent quotes fell on Friday to $64.90 per barrel. Earlier, oil strengthened amid comments from the Fed about keeping interest rates at extremely low levels for a long time, until the regulator sees a noticeable improvement in the situation in the US economy. Additional support for oil quotes was provided by signs of recovery in energy demand, as well as a reduction in oil reserves in the United States. Since the peak levels of US crude oil inventories in June 2020, they have dropped by more than 90 million barrels, according to the latest figures from the US Department of Energy.

However, despite the positive external background, Brent still started to decline. The sell-off was driven by a general deterioration in market sentiment, which triggered a risk aversion for investors. Additional concerns are raised by the upcoming OPEC+ meeting next week, which is expected to change oil production quotas from April. Experts predict that the organization could discuss an increase in production by 500 thousand barrels per day.

It is worth noting that at the upcoming meeting, Saudi Arabia may announce the cancellation of the unilateral commitment to further cut production. And this could return another 1 million barrels of oil a day to the market. Thus, under these conditions, the decline in «black gold» may continue to $60 per barrel.

EUR/USD. February 26, 2021 – Euro fell to the level of 1.2100

On Friday, the euro began to correct, falling to the level of 1.2100. The dollar was supported by macroeconomic statistics from the United States: data on the volume of orders for durable goods in January reflected an indicator growth of 3.4% y/y, expecting an expansion of 0.9% m/m and the previous fact of a rise of 0.5% m/m.

GDP statistics for the IV quarter came out neutral: the economy grew by 4.1% against the forecast of growth by 4.2% and the previous estimate at 4.0%.

Positive news came from the employment market as well. The weekly report on the number of applications for unemployment benefits in the United States reflected a decrease in the indicator to 730 thousand against last week's data at 841 thousand and forecasts of about 828 thousand.

Today you should pay attention to the parameters of personal expenses and income of Americans for January. In terms of income, an increase of 9.4% is expected. In addition, the final value of the consumer confidence index from the University of Michigan for February will be published. If the data does not disappoint again, the dollar will continue to strengthen.