22.02.202111:48 Forex Analysis & Reviews: EUR/USD and GBP/USD: G7 countries to maintain the same level of public spending. Powell will speak before the Congress regarding the Fed's monetary policy. Demand for the euro and pound is increasing amid improving state of economies.

Euro and pound soared amid good macro statistics in both Europe and Britain. The strong indicators show that manufacturing activity is recovering, which, in turn, has led to a fairly good pace of economic growth in both states.

At the same time, last Friday, leaders of G7 countries held a meeting, during which they decided to maintain the current level of public spending. They also agreed that it is necessary to focus on the development of the health sector so that this current crisis will not arise again in the future.

"We will continue to support our economies to protect jobs and support a strong, sustainable and balanced recovery," the members said.

They also revealed that they are considering the possibility of debt relief for developing countries.

In another note, the Federal Reserve will address the Congress this week, in order to find balance between the central bank's policies and the fiscal measures that the Democrats are trying to push through the Senate. But most likely, its chairman, Jerome Powell, will advocate the adoption of a new assistance program, since judging by the latest Fed protocols, there is a need to further support the economy and the labor market, as employment is still far from the target level, just like inflation.

Tomorrow, Powell will speak in front of the Senate Banking Committee, while on Wednesday, he will speak at the House of Representatives. Republicans who oppose the ambitious plan will most likely put pressure on Powell, pointing out the risk of overheating the economy. In any case, Powell's tone and his support for Biden's program are unlikely to have any impact on the market, although his statements may help players understand the future plans of the Fed regarding monetary policy.

As for EUR / USD, pressure on the euro may return this week, especially if the quote drops below 1.2105. Such a bearish move will certainly bring the euro down to 1.2080, and then to 1.2040. But if the bulls manage to regain control over 1.2135, the euro can return to 1.2170, and then rise again to 1.2220.

With regards to macro statistics, composite PMI in the Euro area rose to 48.1 points in February, just a bit higher than the expected 48.0 points by the economists. Despite that, this indicates a decline in activity, since the value is below 50 points.

To put it more precisely. Service PMI dropped to 44.7 points this month, but the decrease was offset by the sharp rise in Manufacturing PMI to 57.7 points.

Meanwhile, PPI has risen by 0.9% y / y, and increased by 1.4% m / m. Such good figures also led to the increase of EUR / USD.

GBP

UK retail sales dropped to 8.2% m / m, and fell by 5.9% y / y. Unsurprisingly, sales declined in almost all sectors following the holiday sales. Growth remained only outside grocery stores.

As for composite PMI, it rose to 49.8 points this February, but is still considered to be quite weak since it is below 50 points. Obviously, quarantine measures continued to affect activity in the service sector.

To put it more precisely, Service PMI rose 49.7 points, while Manufacturing PMI increased to 54.9 points. This improvement in production was driven by renewed growth in new orders.

With regards to GBP/USD, good macro statistics contribute to the growth of the pound, but a downward correction could still take place. Hence, long positions should be opened only after the quote reaches 1.3980 or 1.3927. At the same time, a break above 1.4050 will lead to a further rise towards 1.4120 and 1.4190.