Foreign exchange market update: EUR/USD

Foreign exchange market update EUR/USD
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EUR/USD in the focus

In addition to geopolitical issues and runaway inflation, the markets are increasingly focusing on the interest rate decisions of the national banks. Last week, the European Central Bank already cautiously prepared the market for potentially higher interest rates. This week, the next interest rate meeting of the U.S. Federal Reserve is on the agenda.

The speculation about higher interest rates, especially in the U.S., continue and various analysts expect interest rate increases of up to 1.5% in 2022. Whether this scenario can occur will be answered on Thursday. However, we should not be surprised if the central bank, despite high inflation, falls into a “wait and see” mode due to many negative external factors and moves carefully for the time being.

For EUR/USD, this could be a strong signal for stabilization and potentially also a trend reversal if market expectations are disappointed.

Downward trend since 2021

From a chart perspective, we have now been in a sideways market for 5 years. Currently, we have been in a downward trend since 2021. After the strong sell-off of the euro, a bottom could be reached in the area of 1.0800/1.0900, provided that the US Federal Reserve (FED) increases the interest rate less than expected.

Support 1,0920-1,0950
Support 1,0780-1,0820

Resistance 1,1440-1,1500
Resistance 1,1720-1,1800

The chart below shows a potential bottom formation in EUR/USD:

Foreign exchange rate EUR USD
Source: TradingView

Geopolitics, inflation, central banks are the three keywords that will accompany us in the coming weeks and which will significantly influence the EUR/USD exchange rate. Keep these three topics in focus to navigate through this volatile time.

For more information on the foreign exchange market, please feel free to contact our forex experts!

Please note that this elaboration was completed on 14/03/2022 11:08 CET.
This article is for informational purposes only and does not take into account the particular circumstances of the readers. It does not constitute financial advice. The content of this article is not intended as an offer or solicitation to buy or sell any fx or to take any other action and are not intended to form the basis or part of any contract. Clients should seek independent professional advice and draw their own conclusions with respect to the suitability of the transaction, including its economic merits and risks.The information contained in this article is public data and has been obtained from sources believed by amnis to be reliable and accurate. Amnis Treasury Services AG makes no warranty or representation as to its correctness, accuracy or completeness for a particular purpose. Neither Amnis Treasury Services AG nor any of its employees shall be liable for any damages whatsoever arising out of the use of this article, its contents or otherwise.

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Gerhard Scharinger
Gerhard Scharinger is the Head Markets of amnis. He is an expert in Foreign Exchange, Treasury Management, Economics and Hedging. Besides various published articles and foreign exchange news he is also an international speaker at different events. Follow him and amnis on LinkedIn, Twitter and Facebook to keep up with the latest industry news and insights.
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