General analysis EURUSD for 09.02.2022

Current dynamics

On Wednesday EUR/USD appreciated slightly, but still could not overcome the resistance level of 1.1430. At the end of last week at the ECB meeting the head of the regulator Christine Lagarde surprised investors with her change of rhetoric. The market reacted to the hawkish signals and this led to the growth of both European bonds and the EUR/USD pair. At the same time, according to Lagarde and the head of the Bank of France, the market reaction was excessive and both officials tried to smooth the situation. The futures market suggests that ECB is ready to raise the rate twice this year by 50 basis points in total due to rising price pressures. After that, the head of the European regulator tried to calm the markets by saying that the cancellation of QE may be enough to reduce inflation. Thus Lagarde tried to limit the growth of European bonds, which prevents the moderate ECB to implement its monetary policy plan. At the same time, Christine Lagarde's words are not without merit, and inflation in the Eurozone should slow down sooner than in the US, as US employers are increasing wage costs, catalyzing a rise in inflation.

Meanwhile, the U.S. dollar also has a strong case for strengthening against major currencies. Certainly, 5 acts of monetary restriction will slow U.S. GDP growth. However, we should take into account a possible resumption of a trade war between the U.S. and China. Last year the trade deficit reached a record $859 billion. More than a third of that amount was the trade deficit with China. Everything Donald Trump has accomplished with his successful protectionist policies for the U.S. has been devalued. The PRC has fulfilled its obligations by slightly more than half, and this result does not please Washington at all.

Loretta Mester of the Open Market Committee will speak today at 7:00 p.m. (GMT+2). Tomorrow at 15:30 (GMT+2), the U.S. will release consumer price statistics as well as jobless claims data.

Support and resistance levels

On the 4-hour chart the instrument is testing the Bollinger Bands Moving Average, which is a strong resistance level. The indicator is reversing downward and the price range has contracted, indicating a change in the current trend. MACD histogram is in the positive zone, maintaining a weak buy signal. Stochastic is approaching the overbought area, no signal to open positions has been formed.

• Support levels: 1.1305, 1.1345, 1.1375, 1.1400, 1.1420.
• Resistance levels: 1.1430, 1.1460, 1.1480, 1.1500.

Trading scenarios

• It is possible to open long positions above the level of 1.1440 with a target of 1.1485 and a stop-loss at the level of 1.1415. Implementation term: 1 day of the day.
• Short positions should be opened below the level of 1.1415 with a target of 1.1375 and a stop-loss at the level of 1.1440. Implementation period: 1-2 days.