General analysis EURUSD for 01.04.2022
Current dynamics
Last Thursday the EUR/USD lost significantly in value against the backdrop of the escalating situation in Ukraine. At the beginning of the week the media presented the outcome of the negotiations between Russia and Ukraine as if the parties will soon start working on a peace agreement, which contributed to the strengthening of the European currency. In reality a full ceasefire is still a long way off.
Today the pressure on the pair was put by the publication of the macroeconomic statistics from the Eurozone that showed a decline of the manufacturing activity in the major European economies. Earlier in the day Germany released weak retail sales and labour market data. In the eurozone, consumer spending is falling amid high price pressures. The sanctions imposed against Russia are having a devastating effect on European economies with both households and industry suffering. In the current situation it will be very difficult for the ECB to normalise monetary policy, while the US is ready to aggressively tighten monetary policy by 50 basis points already in May.
In the US, significant labour market and business activity data from ISM came out today. The US unemployment rate fell from 3.8% to 3.6% in March, better than the positive 0.1% forecast. Also in the non-farm payrolls sector 431K people were employed in March, worse than forecast, but the US labour market situation is still much better than in Europe. Also according to PMI data, business activity in the US manufacturing sector slowed down in March from 58.6 to 57.1 points, which came as a surprise to market participants. The mixed data is not critical but the Fed had hoped for more positive data to implement its monetary policy plans.
The Eurogroup will meet on Monday, April 3 at 12:00 (GMT+2). At 16:00 (GMT+2), the U.S. will release statistics on factory orders. Traders also await an official reaction of Russian authorities to a fire at an oil facility, which the Ukrainian armed forces may be involveved it.
Support and resistance levels
On the 4-hour chart, the instrument has fixed below the moveng average of Bollinger Band. The indicator is showing signs of a downward reversal and the price range has contracted, indicating a downtrend correction. The MACD histogram has shifted from positive to neutral zone, forming a weak sell signal. Stochastic is preparing to leave the oversold area, a signal to open long positions may be formed in the next 1-2 days.
- Support levels: 1.0840, 1.0900, 1.0950, 1.1022.
- Resistance levels: 1.1065, 1.1105, 1.1180, 1.1225.
Trading scenarios
- Short positions should be opened below the level of 1.1020 with a target of 1.0955 and a stop-loss at 1.1080. Implementation period: 1-2 days.
- Long positions can be opened above the level of 1.1105 with a target of 1.1180 and a stop-loss at 1.1075. Implementation period: 1-2 days.