The price of the US dollar locally strengthened against the euro and the pound. There were only slight price changes, but they still led to the first drastic changes in the market for a long time.

Considering the economic calendar, the focus was on the publication of the first estimate of European GDP for the fourth quarter, where the rate of economic decline accelerated from -4.3% to -5.1%.

The European currency almost immediately reacted to the negative statistics, which resulted in the acceleration of the downward trend.

In turn, the UK and the US did not publish any particular noteworthy data.

What happened on the trading chart?

The EUR/USD pair broke through the support area of 1.2050/1.2070 for the first time in a long time and headed towards the psychological level of 1.2000. The market received a signal to prolong the corrective move from the high of the medium-term trend. In order to confirm it, market participants must stay below the level of 1.2000.

The GBP/USD pair also showed a downward activity yesterday, hitting the support level of 1.3650 locally. However, the quote still returned above the key level at the end of the day.

Trading recommendations on EUR/USD and GBP/USD for February 3, 2021

Today, the main focus is on Europe's inflation data, whose rate is expected to enter the positive zone for the first time in five months of deflation. Thus, inflation may rise from -0.3% to 0.5%, which is the largest change in recent years. Once the expectations are confirmed, the euro may receive an impulse to locally rise.

10:00 Universal time - EU inflation

During the US trading session, the ADP report on the employment level in the United States will be published, where they predict growth for January by 49 thousand, which is quite good.

13:15 Universal time - US ADP report

If we analyze the current trading chart of EUR/USD, it can be seen that the quote left the psychological level of 1.2000 and returned to the level of 1.2050. Now, much will rely on speculative interest, since in terms of fundamental analysis, positive data on European inflation can push the quote up. At the same time, the extension of the correction can still be implemented in the market.

Based on the data, two main trading ideas are worth noting:

The first one considers the prolongation of the correction course. But in this case, the quote must stay lower than 1.2000 within the H4 time frame, which will open the way towards the level of 1.1810.

Second is to move on positive inflation data, where holding the price above the level of 1.2050 may open a local movement towards 1.2150.

As for the current trading chart of GBP/USD, it can be noticed that the quote is still trying to break through the pivot point of 1.3650, periodically hitting it with shadows. There is a potential for a decline in the market, so we continue to monitor the price holding below this coordinate for a four-hour period, to confirm the sell signal.

However, if all attempts to break the pivot point did not work out, then the method of moving on a rebound will still be relevant in the market.