General analysis EURUSD for 08.03.2022

Current dynamics

On Tuesday EUR/USD pair showed moderate recovery after falling during 5 trading sessions in a row. Today the pair was supported by positive statistics on industrial production in Germany. Industrial production rose by 2.7% in January, more than 5 times the forecast. However, it is clear that industrial activity in the Eurozone will decline due to the events in Ukraine. The European Union wants to get rid of its dependence on Russian energy sources, but cannot afford to do so in the current situation. Discussions about abandoning Russian oil and gas are pushing up energy prices, adding to price pressures. Inflation in the Eurozone is rising fast precisely because of the rising cost of hydrocarbons. Fuel prices are rising every day, the price of gas has reached an all-time high, and European consumers are forced to increase spending on utilities. European leaders are trying to prevent the imposition of sanctions against Russia's energy sector. In addition, Russia and Belarus are the largest suppliers of grain and fertilizers to the EU, which creates even more significant risks for the economy of a united Europe.  
Sanctions against the Russian Federation are very bad for Europe, but good for the US, which is pushing for more sanctions pressure. The ECB was clearly not prepared for such a development. The regulator understands that much of the inflation is formed on the back of rising energy prices, but it cannot influence the situation. Even the most aggressive ECB members are forced to reconsider their stance on monetary policy normalisation. A reduction in QE is likely to be postponed, as are plans to tighten monetary policy.
The situation in the global economy continues to deteriorate due to the conflict in Ukraine. The stock market is falling and global GDP forecasts are deteriorating. At the same time, the dollar and gold are strengthening as a safe haven asset. Investizo expects the pair to decline further towards the 1.0700-1.0650 range in the medium term.

Support and resistance levels

On the 4h chart, the instrument is strengthening in the lower range of the Bollinger Band indicator. The indicator is pointing downwards and the price range remains wide, indicating a continuation of the downtrend. MACD histogram is in the negative zone, holding a strong sell signal. Stochastic is preparing to enter overbought area, a strong sell signal is expected within 1-2 days.

• Support levels: 1.0630, 1.0675, 1.0725, 1.0765, 1.0805, 1.0870.
• Resistance levels: 1.0935, 1.0975, 1.1015, 1.1050, 1.1090.

Trading scenarios

• Short positions can be opened at the current price with a target of 1.0840 and a stop loss at 1.0955. Implementation period: 1-3 days.
• Long positions should be opened above 1.0950 with a target of 1.1030 and a stop loss at 1.0910. Implementation period: 1-3 days.