General analysis EURUSD for 02.02.2022

Current dynamics

The EURUSD pair is recovering this week, rebounding from its lowest price levels in a year and a half. Five acts of monetary tightening by the Fed have already been taken into account by the market, while signals of earlier monetary tightening in the Eurozone are getting stronger. Back in January, the futures market was predicting one 10 basis point rate hike in 2022. At the moment experts expect the ECB to raise the rate 2 times, with the first increase coming in July. 
Market participants were disappointed that none of the members of the Open Market Committee supported the initiative to raise the rate by 50 basis points in March. Government bond yields are rising and buyers believe that inflation will fall without further Fed intervention, which will lead to a slowdown in rate hikes. 
ADP employment data released today contributed to the dollar's decline. At the same time, key U.S. labor market data will be released on Friday. The January consumer price index reading from the Eurozone rose to 5.1%, which was well above expectations and allowed the trading instrument to overcome the resistance level of 1.1300. Next Thursday is packed with a lot of important macroeconomic publications, so Investizo allows for strong volatility in the market during the day.

Tomorrow at 11:00 am (GMT+2) the Eurozone will publish January business activity statistics, and at 12:00 (GMT+2) the region's retail sales will be released. Thursday's ECB monetary policy meeting at 14:45 (GMT+2) and the European regulator's press conference at 15:30 (GMT+2) will be the main event for the currency pair. Also tomorrow at 15:30 (GMT+2), the U.S. will release jobless claims data and the non-manufacturing purchasing managers' index at 17:15 (GMT+2).

Support and Resistance Levels

On the 4-hour chart, the instrument is strengthening along the upper border of the Bollinger Bands. The indicator is directed upwards and the price range remains wide, which indicates the continuation of the uptrend. MACD histogram is in the positive zone, preserving a buy signal. Stochastic is leaving the overbought area, forming a sell signal.

Support levels: 1.1120, 1.1155, 1.1180, 1.1220, 1.1245, 1.1275.
Resistance levels: 1.1330, 1.1365, 1.1390.

Trading scenarios

Long positions can be opened at the current price with a target of 1.1365 and a stop-loss at 1.1280. Implementation period: 1-2 days.
Short positions should be opened below the level of 1.1280 with a target of 1.1225 and a stop-loss at 1.1310. Implementation period: 1-2 days.