23.02.202204:14 Forex-elemzések és áttekintések: Overview of the EUR/USD pair. February 23. The "swing" continues. We are moving away from geopolitics, returning to the economy.

The EUR/USD currency pair continued to trade in a "swing" mode on Tuesday. This is perfectly visible on almost any timeframe, except for the smallest ones. The 4-hour chart clearly shows that the pair is stuck between the levels of 1.1292 and 1.1388. This is about a 100-point side channel. And although the price did not spend much time in it (about a week), it is still impossible to deny that a flat has formed on the market now. Perhaps not the most eloquent flat, because the pair is still moving inside this side channel, but there is no trend in the most short-term perspective. Thus, on the 4-hour TF, the pair continues to be located below the moving average line, which should speak in favor of further growth of the US currency. However, this is not happening yet. The dollar now has a good chance of continuing growth, since almost all macroeconomic, fundamental, and geopolitical factors support it. Why doesn't it grow then? From our point of view, the market continues to remain in a very suspended state due to geopolitics. Traders have shown that they are not ready to respond to the Ukrainian-Russian crisis. Under the influence of this factor, the cryptocurrency market, the US and Russian stock markets, the Russian ruble, but not the euro or the pound collapsed. Although the dollar is considered a "reserve" currency, the foreign exchange market is too large to react to the conflict in Eastern Ukraine. At least, at the moment, this is the only conclusion that can be drawn. In general, the US currency continues to be close to its 14-month highs and, in principle, maintains an upward trend. Perhaps the market is waiting for the next Fed meeting as if to remind it that macroeconomic factors are still in the first place in terms of importance for it.

What has changed for the euro and the dollar over the past week?

Over the past two weeks, the market has completely shifted its attention to the geopolitical conflict between Ukraine and the Russian Federation. And in fact between the West and the Russian Federation. Currently, the European Union and the United States are actively discussing sanctions against Moscow and its officials and oligarchs. Germany announced yesterday that it could "freeze" the launch of the Nord Stream-2. The United States and the United Kingdom are also in favor of this initiative. However, all this is again geopolitics, which does not affect the dollar, euro, or pound much now. Thus, we propose to return to the economy and see what kind of sky each currency is in now and what are its prospects?

First of all, it should be noted that the macroeconomic situation has hardly changed in recent weeks. The ECB has not made a single "hawkish" statement, has not made it clear to traders that it is ready to tighten monetary policy this year. The Fed, on the contrary, constantly continues to signal that the first-rate hike will happen in March, and there may be as many as 7 of them this year. Moreover, in March, the rate may be raised immediately by 0.5%.

In addition, macroeconomic statistics from overseas are much stronger than from the European Union. First of all, this concerns GDP. After all, in conditions of increased inflation, when the question of raising the rate is at the forefront, it is the growth rate of the economy that is very important, since, with the tightening of monetary policy, these rates will fall. It's one thing when they make up 6-7% per quarter (as in the USA) and a few percent can be sacrificed to reduce inflation. Another thing is when they tend to 0 (as in the European Union), so the ECB does not physically have the opportunity to raise the rate. This factor, from our point of view, is the most important for determining the further trend of the euro/dollar pair. So far, purchases of the US dollar still look more promising. Especially against the background of geopolitical tensions in Eastern Europe. There will be practically no really important reports this week, so the overall fundamental background is unlikely to change. I would also like to note that the talks between Vladimir Putin and Joe Biden on February 24 are also unlikely to affect anything. And they are even unlikely to lead to a de-escalation of the conflict.

The volatility of the euro/dollar currency pair as of February 23 is 68 points and is characterized as "average". Thus, we expect the pair to move today between the levels of 1.1282 and 1.1418. The reversal of the Heiken Ashi indicator downwards signals a round of downward movement.

Nearest support levels:

S1 – 1,.292

S2 – 1.1230

S3 – 1.1169

Nearest resistance levels:

R1 – 1.1353

R2 – 1.1414

R3 – 1.1475

Trading recommendations:

The EUR/USD pair continues to remain below the moving average line. Thus, now we should consider new short positions with targets of 1.1292 and 1.1282 in case of a rebound from the moving average. Long positions should be opened no earlier than fixing the price above the moving average with targets of 1.1414 and 1.1418. In both cases, it should be borne in mind that there is now a possibility of a flat.

Explanations to the illustrations:

Linear regression channels - help determine the current trend. If both are directed in the same direction, then the trend is strong now.

Moving average line (settings 20.0, smoothed) - determines the short-term trend and the direction in which trading should be conducted now.

Murray levels - target levels for movements and corrections.

Volatility levels (red lines) - the likely price channel in which the pair will spend the next day, based on current volatility indicators.

CCI indicator - its entry into the oversold area (below -250) or into the overbought area (above +250) means that a trend reversal in the opposite direction is approaching.