Bullish View
- Buy the EUR/USD pair and set a take-profit at 1.1400.
- Add a stop-loss at 1.1260.
- Timeline: 1-2 days.
Bearish View
- Set a sell-stop at 1.1310 and a take-profit at 1.1260.
- Add a stop-loss at 1.1400.
The EUR/USD pair tilted higher as investors reacted to the Russian invasion of Ukraine on Monday. The pair also reacted mildly to the latest American consumer confidence data. It is trading at 1.1337, which was higher than this week’s low of 1.1288.
Russia and Ukraine Crisis
On Monday, Vladimir Putin delivered a major speech in which he agreed to recognize two parts of Ukraine. He then immediately asked his troops to move to the two areas for “peacemaking.”
The move was condemned by both Ukraine and its Western allies like the United States and Germany. And in response, Germany decided to halt the Nord Stream 2 pipeline project that will bring natural gas from Russia.
A coalition of allies like the US, UK, and Japan also decided to implement limited sanctions on Russia. The countries warned that a further encroachment into Ukraine will lead to tougher sanctions that will isolate Russia in the world market.
Meanwhile, the Conference Board published relatively strong economic data from the US. The data revealed that consumer confidence declined from 111.1 in January to 110.5 in February. This decline was better than the median estimate of 110.0. According to the board, most Americans continue citing inflation as their major concern.
Further data revealed that the American economy did well in February. According to Markit, the flash manufacturing and services PMI rose to 57.5 and 56.7, respectively. These numbers provide the Fed with more motivation to tighten.
The next key catalyst for the pair will be the upcoming Eurozone inflation numbers. Economists expect the data to show that prices jumped to more than 5% in January. While these numbers are important, their impact on the pair will be a bit limited considering that Eurostat already published the estimates three weeks ago.
EUR/USD Forecast
The four-hour chart shows that the EUR/USD pair formed a strong support at 1.1287. It has struggled to move below this level several times before. It is trading between the 38.2% and 50% Fibonacci retracement levels. Also, the pair is trading at the same point as the 25-day and 50-day moving averages.
Therefore, there is a likelihood that the pair will keep rising as bulls target the next key resistance level at 1.1400. This view will be invalidated if the price manages to move below the support at 1.1300.
