General analysis EURUSD for 23.02.2022
Current dynamics
This week EURUSD is demonstrating a slight growth. The situation in Ukraine remains at the center of attention. President Putin recognized the sovereignty of the DNR and LNR, Russia invaded Ukraine, and in response, the West imposed economic sanctions. At the same time, the sanctions did not affect the Russian oil and gas sector, which allowed to avoid serious shocks in the commodity market. Investors are probably satisfied with how things are developing in Eastern Europe, as evidenced by the absence of price gaps in oil prices, the recovery of indices, as well as rising bond yields. In addition, as a consequence of the sanctions, we note the closure of a large volume of long positions in safe-haven assets, such as the yen, Swiss franc, and gold.
Yesterday the dollar was supported by a hawkish speech from Michelle Bowman, a member of the Open Market Committee. Like many of her colleagues before her, Bowman supported a 50 basis point rate hike at the March meeting. There is no unanimity among Fed officials on the scope of the first hike, with the probability of a 50-point increase in the federal funds rate estimated at a 34% probability.
The pair was supported by the improvement of the business climate in Germany amid the overcoming of the pandemic consequences. While the IFO business expectations index reached July highs, consumer confidence in the U.S. has fallen. U.S. citizens are worried about high inflation, which is affecting incomes and limiting economic growth.
No important macroeconomic releases from either side are expected today. Tomorrow at 3:30 p.m. (GMT+2), the U.S. will release meaningful statistics on the labor market and GDP. These data may have a significant impact on the pair's dynamics ahead of the Fed meeting in March.
Support and resistance levels
On the 4-hour chart the instrument trades in the upper range of Bollinger Bands. The indicator is turning downward and the price range has contracted, indicating that the current trend is about to change. The MACD histogram is consolidating near the zero mark, no signal to open positions has been formed. Stochastic also does not give a clear signal to enter the market.
- Support levels: 1.1210, 1.1240, 1.1270, 1.1300, 1.1335.
- Resistance levels: 1.1370, 1.1395, 1.1430, 1.1465, 1.1480.
Trading scenarios
- Long positions can be opened at the current price with a target of 1.1400 and a stop loss at 1.1310. Implementation period: 1-2 days.
- Short positions should be opened below the level of 1.1320 with a target of 1.1280 and a stop-loss at the level of 1.1345. Implementation period: 1-2 days.