A Healthy Retracement Provides Better Short Entries for EURUSD
Updated
The value of Euro dropped significantly this year due to geopolitical tension between Russia and Ukraine, which has led to an inflation in Europe. Furthermore, US raising the interest rate and a dovish statement made by the ECB during the last EU interest rate decision further provided bearish momentum for the Euro. EURUSD is now channeling in a clear downtrend, and we are only looking for sell opportunities from the pullback.
This pair has dropped to a new low of 1.0760 area, formed a double bottom and broke out of its neckline, signaling the beginning of the retracement stage. The first area to watch is the upside of the short-term downtrend channel, which could be in the area of 1.0900 (approximately 150 pips of retracement). Second key area to watch is the level at the 1.0950 area (approximately 200 pips of retracement). From those levels, we will observe to see whether the price will consolidate and form a reversal pattern and then a breakout.
Key fundamentals to watch for the Euro currency
Due to the current geopolitical tension, Euro can be easily affected by fundamental news. This pair has been very volatile recently, and any good news from the war (unlikely but not impossible), could send this pair 100 pips to the upside. Also, we need to focus on ECB President Lagarde’s speech. If she hints any possible rate hike in the future, that could immediately provide an enormous bullish momentum for this pair. Lastly, we also need to focus on the French election. If Macron is declared a winner, we expect the result to favor the Euro.
President Lagarde’s speech time: April 21st, 18:00; April 22nd, 14:00
Fed Chair Powell’s speech: April 21st, 16:00 & 18:00
French President Election 2nd Round Result: April 24, 2022 19:00
(UK time, GMT+1hour)
This pair has dropped to a new low of 1.0760 area, formed a double bottom and broke out of its neckline, signaling the beginning of the retracement stage. The first area to watch is the upside of the short-term downtrend channel, which could be in the area of 1.0900 (approximately 150 pips of retracement). Second key area to watch is the level at the 1.0950 area (approximately 200 pips of retracement). From those levels, we will observe to see whether the price will consolidate and form a reversal pattern and then a breakout.
Key fundamentals to watch for the Euro currency
Due to the current geopolitical tension, Euro can be easily affected by fundamental news. This pair has been very volatile recently, and any good news from the war (unlikely but not impossible), could send this pair 100 pips to the upside. Also, we need to focus on ECB President Lagarde’s speech. If she hints any possible rate hike in the future, that could immediately provide an enormous bullish momentum for this pair. Lastly, we also need to focus on the French election. If Macron is declared a winner, we expect the result to favor the Euro.
President Lagarde’s speech time: April 21st, 18:00; April 22nd, 14:00
Fed Chair Powell’s speech: April 21st, 16:00 & 18:00
French President Election 2nd Round Result: April 24, 2022 19:00
(UK time, GMT+1hour)
Note
EURUSD has broken the first resistance level at the upper area of the short-term downtrend channel (1.0900). The price is heading towards the previous support level of 1.0950. Lagarde and Powell are both speaking tonight. We will carefully watch the price action during the speech and update this post with relevant information from the speech.
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