FX.co ★ EUR/USD analysis and outlook for March 22, 2022

Everything going according to plan

Hi, dear traders!

Yesterday's main event on the economic calendar was a speech by Jerome Powell, chairman of the Federal Reserve. Powell once again expressed concern at high inflation. "There is an obvious need to move expeditiously to return the stance of monetary policy to a more neutral level, and then to move to more restrictive levels if that is what is required to restore price stability," Powell said. The Fed chairman stated the regulator must act fast and decisively to tackle this prolonged issue, even if it would require increasing the rate to very high levels. He also noted that the Fed could increase the interest rate by 50 basis points at its next meeting. This undoubtedly hawkish speech significantly influenced the price dynamics of the US dollar.

Today, ECB president Christine Lagarde is set to give a speech. Market players have often ignored her comments. At this point, however, high inflation is a serious issue in the Eurozone as well – hawkish comments followed by similarly hawkish actions by the regulator are long overdue. The best course of action for the ECB is tightening its monetary policy to bring soaring inflation under control. Today, FOMC board members John Williams and Mary Daley are set to speak as well.

Daily

As forecasted earlier, EUR/USD surpassed 1.1100-1.1122. However, the pair encountered strong resistance at the pink line drawn through 1.1495-1.1358. The blue Kijun-Sen line of the Ichimoku cloud also pushed the pair down. At the moment of writing, EUR/USD has been in a downtrend for 3 straight trading days, now trading below the key psychological level of 1.1000 under increasing pressure. Attempts by euro bulls to reverse the pair upwards were thwarted by the red Tenkan-Sen line. EUR/USD is expected to fall towards 1.0958 – the high of March 8.

H4

According to the H4 chart, the pair has fallen below the black 89-day EMA and blue 50-day SMA lines. EUR/USD has been moving downwards for the past 3 day – the pair could perform an upward correction towards the broken moving average lines. Traders could consider opening short positions in the 1.1000-1.1045 price zone if bearish reversal candlestick patterns appear in this area at H4 or H1 charts. At this point, taking short positions on EUR/USD is the main trading strategy. However, if the pair falls into the 1.0920-1.0900 area, traders could consider going long as well.

Good luck!