General analysis EURUSD for 17.03.2022

Current dynamics

Yesterday the Fed held a monetary policy meeting. The regulator took into account the uncertainty in the global economy, the main driver of which is the Ukrainian conflict, and raised the rate by 25 basis points. This is the first increase since 2018, with the Fed not starting the cycle with a 50 basis point increase. In total, the regulator plans seven acts of monetary tightening by the end of this year. The next tightening is expected to take place in May and, likely, the volume will also not exceed 25 points, despite the wishes of several voting members.
Also noteworthy is Powell's statement that the US economy is strong and ready to implement aggressive monetary policy. At the same time, the decline of US GDP growth forecast by 1.2% in 2022 as well as the conflict in Ukraine and the worsening epidemiological situation in China cast doubt on the Fed Chairman's claims.
For the European currency less aggressive than previously expected Fed policy at the start of the rate hike cycle is a supportive factor. It is a slight but nevertheless reduction of the monetary policy gap between the Fed and the ECB. The Fed's action is a signal that the US central bank will act according to the situation, based on inflation and geopolitics. EUR/USD was in turn supported by the imposition of a lockdown in China's industrial center Zhenzhen. The supply deficit in the hydrocarbon market has narrowed and energy prices are showing a decline, easing price pressures in the Eurozone economy.
In less than an hour, US business and labor market data are expected to be released. Also today at 15:15 (GMT+2), the U.S. will publish industrial production statistics. The market may react to the news strongly, as there is a contradiction between the Fed chief's statement and the actual statistics. 

Support and resistance levels

On the 4h chart, the instrument is testing a strong resistance level of 1.1050. The Bollinger Band indicator has reversed upwards and the price range has slowly widened, indicating that an uptrend is forming. The MACD histogram is in the positive zone, forming a buy signal. Stochastic has entered the overbought area, a strong sell signal is expected within 1-2 days.

• Support levels: 1.0830, 1.0920, 1.0985.
• Resistance levels: 1.1050, 1.1125, 1.1195, 1.1250, 1.1330.

Trading scenarios

• Long positions can be opened above the level of 1.1075 with a target of 1.1125 and a stop-loss at 1.1035. Implementation period: 1-2 days.
• Short positions should be opened below the level of 1.1020 with a target of 1.0920 and a stop-loss at 1.1060. Implementation period: 1-2 days.