EURUSD is in downtrend since 07th of January 2021 due to declaration of increasing interest rate in the USA by FED and limiting bond buying action for 120 billion every month. It was a reaction to increasing inflation. Inflation was caused by FED action low interest rates and buying bonds action, if we apply monetary theory of supply and demand of money. Naturally it was stimulation action after Covid-19 epidemy, but FED action is source of the inflation not COVID epidemy, how it was publicly presented. In meantime, ECB is the only major economy central bank keeping interest rates below zero (-0.50%). Such dovish action is result of decision to support European economy after Covid epidemy, and for the last 3 months is connected with Russian invasion on Ukraine. Sanction to Russian energy sources natural gas and oil increased energy risk for eurozone.
Capital is searching better conditions (higher interest rate and security). USD offer much better conditions than EUR at this moment of time. At this moment ratio is 1.05264 and usually is ranging between 1.15 to 1.20.
At this moment EURUSD is coming to historic low on level 1.03575. This level was tested 5 times in history. 15.12.2016, 20.12.2016, 03.01.2017, 13.05.2022, 15.06.2022. We are touching historical support level. It was broken once between June 1999 to January 2003.
Trading strategy for traders with appetite for higher risk. There is a fair chance that EURUSD will bounce again from this level, and you can search entry level somewhere above 1.03575 to 1.04100, with tight stop loss 1.03550 or even 1.03530. You can use trailing stop for your security. Argumentation is that ECB may be force to rapidly increase interest rate to fight growing inflation or apply other instruments to bring down supply of money to the market. Such action was prepared after emergency meeting of ECB on 15.06.2022 and declaration of researching new crisis tools. The main problem is Italy with debt of 150% of GDP, increase of interest rate may be a death kiss to Italian economy.
Longer perspective for EURUSD prediction for EURUSD wary from level 1.05 to 1.03, parity level 1.0 or even below parity 0.95. Depending on different assumptions.
What we know:
1. War in Ukraine will continue for next months or years.
2. Fighting inflation will take a lot of time and effort from all Eurozone members and will be painful.
3. Other major economies will increase interest rates to directly fight inflation.
4. ECB is very limited in possibility of increasing interest rates, due to political risk of instability of Eurozone due to heavy indebt countries of Southern Europe (especially Italy).
This is short term opportunity, but with risk going against fundaments of EURUSD dynamics. If accumulation phase ranging 1.0375 to 1.07755 will continue, chances for bullish trade will increase.
Capital is searching better conditions (higher interest rate and security). USD offer much better conditions than EUR at this moment of time. At this moment ratio is 1.05264 and usually is ranging between 1.15 to 1.20.
At this moment EURUSD is coming to historic low on level 1.03575. This level was tested 5 times in history. 15.12.2016, 20.12.2016, 03.01.2017, 13.05.2022, 15.06.2022. We are touching historical support level. It was broken once between June 1999 to January 2003.
Trading strategy for traders with appetite for higher risk. There is a fair chance that EURUSD will bounce again from this level, and you can search entry level somewhere above 1.03575 to 1.04100, with tight stop loss 1.03550 or even 1.03530. You can use trailing stop for your security. Argumentation is that ECB may be force to rapidly increase interest rate to fight growing inflation or apply other instruments to bring down supply of money to the market. Such action was prepared after emergency meeting of ECB on 15.06.2022 and declaration of researching new crisis tools. The main problem is Italy with debt of 150% of GDP, increase of interest rate may be a death kiss to Italian economy.
Longer perspective for EURUSD prediction for EURUSD wary from level 1.05 to 1.03, parity level 1.0 or even below parity 0.95. Depending on different assumptions.
What we know:
1. War in Ukraine will continue for next months or years.
2. Fighting inflation will take a lot of time and effort from all Eurozone members and will be painful.
3. Other major economies will increase interest rates to directly fight inflation.
4. ECB is very limited in possibility of increasing interest rates, due to political risk of instability of Eurozone due to heavy indebt countries of Southern Europe (especially Italy).
This is short term opportunity, but with risk going against fundaments of EURUSD dynamics. If accumulation phase ranging 1.0375 to 1.07755 will continue, chances for bullish trade will increase.