General analysis EURUSD for 28.02.2022
Current Dynamics
On Monday, the European currency weakened significantly against the U.S. dollar, opening with a significant price gap. At the moment the pair is recovering from the background of the negotiations between Russia and Ukraine. However, the military operation in Ukraine will not affect the Fed's monetary policy plans. Conflict in Eastern Europe has almost no impact on the U.S. economy. The dollar continues to strengthen as a safe haven currency, and the Fed leadership insists on the aggressive tightening of monetary policy.
The head of the American regulator will soon address the Congress and it is already known about the "hawkish" nature of the prepared comments. In addition, James Bullard, the head of the St. Louis Fed called to raise the rate by 100 basis points in the next three meetings of the Fed. The Federal Reserve obviously won't abandon its plans, the more so as it is necessary to raise the rate by 1.5%, i.e. at least by 0.25 basis points at 6 meetings in order to fight the high inflation.
Unlike the U.S., Russia's economic ties with the Eurozone are very strong and important to both sides. The sanctions imposed against the Russian Federation are increasing uncertainty, will significantly weaken the European economy, and will contribute to the EURUSD decline. Prices in the European energy market will continue to rise at an accelerated pace, with energy supplies shrinking and inflation in the region rising. Investizo predicts a sharp economic decline over the summer if Russia restricts energy supplies. In this case, the EU economy will be in a state of stagflation.
Market participants are waiting for comments on the outcome of the talks between Kyiv and Moscow. In case of even a temporary cease-fire, the pair will strengthen for some time. ECB head Christine Lagarde's speech scheduled for 17:50 (GMT+2) may have a significant impact on the trading instrument today.
Support and resistance levels
On the 4-hour chart the instrument trades in the lower range of the Bollinger Band indicator. The indicator is directed downward and the price range remains wide, indicating a continuation of the downtrend. Histogram MACD is in the negative zone, holding a strong sell signal. Stochastic does not give a clear signal to open positions.
- Support levels: 1.1035, 1.1075, 1.1010, 1.1150, 1.1195.
- Resistance levels: 1.1235, 1.1275, 1.1315, 1.1355, 1.1390.
Trading scenarios
- It is possible to open short positions at the current price with a target of 1.1095 and a stop-loss at the level of 1.1245. Implementation period: 1-2 days.
- Long positions should be opened above the level of 1.1255 with a target of 1.1310 and a stop-loss at 1.1215. Implementation period: 1-2 days.