General analysis EURUSD for 02.05.2022

Current dynamics

On Monday the trading volume on the Forex market is reduced as it is an official bank holiday in some countries. EUR/USD is trading in a limited price range near the five-year lows.
Investizo believes that the pair will continue to trade in a downtrend at least until the Fed meeting on monetary policy, which will be held next Wednesday. Traders have been focusing on weakness in the Eurozone economy, amid escalating conflict in Ukraine. The sanctions that European countries are imposing against the Russian Federation are having a detrimental effect on the economies of both sides. Notably, positive European Union macroeconomic reports released on Friday did not provide support for EUR. Inflation rose by 0.6% in April, 0.1% higher than forecast. Furthermore in annual terms inflation rose by 7.5%. Growing price pressures will surely force the ECB to conduct at least two rounds of monetary policy tightening this year. In contrast, the USA will carry out a similar procedure much more frequently and aggressively. 
Business data published today in Germany in particular and in the Eurozone in general beat the forecast, which contributed to a short-term recovery in the trading instrument. However, data published a little later, which showed a decline in consumer confidence in the EU, caused a return to the usual downtrend.
Today at 16:00 (GMT+2) the US will release statistics on manufacturing activity. The key event this week is the Fed meeting on Wednesday at 20:00 (GMT+2).

Support and resistance levels

On the 4-hour chart, the instrument has consolidated below the Bollinger Bands moving average. The indicator is turning sideways and the price range has contracted, indicating a downtrend correction. The MACD histogram is in the negative zone, maintaining a strong sell signal. Stochastic has entered oversold area, a signal to open long positions may be formed in the next 1-2 days.

• Support levels: 1.0420, 1.0450, 1.0485, 1.0530.
• Resistance levels: 1.0570, 1.0640, 1.0705.

Trading scenarios

• Short positions should be opened at the current price with a target of 1.0420 and a stop loss at 1.0575. Implementation period: 2-3 days.
• Long positions can be opened above the level of 1.0580 with a target of 1.0650 and a stop-loss at the level of 1.0520. Implementation period: 2-3 days.