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Analysis and Education>Technical Analysis: EURUSD

Technical Analysis: EURUSD

21.09.2022

The euro decreased as the US dollar increased


On Tuesday, EURUSD decreased by 0.6% to 0.9966. The US dollar was boosted as the market expects that the Fed will be aggressive on increasing the interest rate.


The Fed is expected to be aggressive on raising the interest rate


On Wednesday, the Fed will conclude a 2-day policy meeting ending on 21st September. It is expected that the Fed will raise the interest rate by at least 75 basis points. In addition, the probability that the US Fed will increase the interest rate by 100 basis points is less than 20%.

 

The Fed is raising the interest rate at the fastest pace in 30 years. Although US CPI falls from a 40-year high of 9.1%, it is still high than the target of 2%. Fed officials think the Fed should take proactive steps in response.


The ECB will raise the interest rate to curb inflation


The ECB Governor Lagarde said on 20th September that interest rates would be raised in following months to curb inflation, adding that it signals our firm commitment to making the inflation return to the mid-term target of 2%.


Lagarde warned that Eurozone inflation had been revising the record high for the 10th straight month and it would continue increasing. Bottlenecks in supply and repressed service demands have made inflation expand to industry sector and service sector. Rising energy price caused by Russia-Ukraine conflict is major driver of Eurozone inflation.


Technically speaking, the market trend is bearish


On the chart of the day, EURUSD was capped at the descending trend line. The market trend is bearish. In terms of technical indicators, kdj went downwards after death cross occurred, indicating that EURUSD will fall further. EURUSD will drop further to 0.9864 if it breaks below 0.9945.


On the 4-hour chart, EURUSD fluctuated and decreased. The market trend is bearish. In terms of technical indicators, macd went downwards after death cross occurred, showing that the market trend is bearish. EURUSD will decline further if it is capped at 1.000.


Key resistance: 1.0000, 1.0020, 1.0050

Key support: 0.9945, 0.9864, 0.9800


Generally, the US dollar index surged and EURUSD may fall further as the Fed is aggressive on raising the interest rate. Investors should focus on the US Fed interest rate decision during the day.

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