General analysis EURUSD for 26.04.2022
Current dynamics
During the current week the single European currency continues to decline against the dollar. Sure, Macron's win in the French presidential elections is positive for the EUR, however in the current situation the re-election of the French president is more of a loss limitation than a growth driver. IFO index data indicated a rise in business optimism in Germany, but was ignored by the market. Meanwhile, negative US consumer confidence index statistics as well as a drop in primary housing market sales did not affect the overall downtrend of the pair.
The potential of the US economy is significantly higher than that of the European economy. On Thursday Federal Reserve Chairman Powell, speaking at an International Monetary Fund event, reiterated the regulator's intention to accelerate the pace of monetary policy tightening. It is worth noting that the Fed was prepared to raise rates by 50 basis points as early as March, but Russia's special operation in Ukraine has slowed the cycle. However, the ECB also announced a rate hike soon. The first increase is expected in July, followed by September and December. At the same time, GDP forecast for the Eurozone has been lowered from 3% to 2.7% in 2022 and from 2.3% to 1.3% in 2023.
Given its proximity to Ukraine and involvement in the conflict, the European Union economy will not be able to compete with the US economy. Rising energy prices amid a difficult geopolitical situation as well as dependence on Russian oil and gas increase pressure on the pair. Also worth noting is the difficult epidemiological situation in China, where industrial activity continues to decline. In the current environment of slowing global economic growth, the US dollar will continue to strengthen as a safe-haven asset for risk diversification.
Tomorrow at 13:30 and 18:00 (GMT+2), ECB Chair Christine Lagarde will speak. At 16:00 (GMT+2), the US will release data on pending real estate transactions.
Support and resistance levels
On the 4-hour chart the instrument is declining along the lower boundary of the Bollinger Bands. The indicator is pointing downwards and the price range is widening, indicating a continuation of the downtrend. MACD histogram is in the negative zone, keeping a sell signal. Stochastic has entered oversold area, a signal to open long positions may be formed in the next 1-2 days.
- Support levels: 1.0530, 1.0570, 1.0610, 1.0645.
- Resistance levels: 1.0710, 1.0750, 1.0795, 1.0850, 1.0910, 1.0985.
Trading scenarios
- Short positions should be opened at the current price with a target of 1.0570 and a stop-loss at 1.0720. Implementation period: 2-3 days.
- Long positions can be opened above the level of 1.0720 with a target of 1.0850 and a stop-loss at the level of 1.0675. Implementation period: 2-3 days.