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Home ANALYSIS

EURUSD moves lower but stays above 2022 low. What next for the pair?

A.R Chowdhury by A.R Chowdhury
February 28, 2022
Reading Time: 4 mins read
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EURUSD moves lower but stays above 2022 low. What next for the pair?

EURUSD

EURUSD tumbles lower on Russian invasion of Ukraine

The  EURUSD 
EUR/USD

The EUR/USD is the currency pair encompassing the European Union’s single currency, the euro (symbol €, code EUR), and the dollar of the United States (symbol $, code USD). The pair’s rate indicates how many euros are needed in order to purchase one dollar. For example, when the EUR/USD is trading at 1.2, it means 1 euro is equivalent to 1.2 dollars.  Why the EUR/USD is the Most Popular Trading PairCompared to all tradable currencies, the euro (EUR) is the world’s second most traded currency, behind only the US dollar. This currency pair is the most traded and liquid currency pair on the market.As the most popular trading pair, the EUR/USD is a staple of every brokerage offering and often has some of the lowest spreads relative to other pairs. Ultimately, the currency follows the two most economic blocs in the world and sees the most volume for this reason.The EUR/USD has a wide range of factors that influence its rates. From the EUR side, economic data in the Eurozone as well as internal factors in the bloc can easily impact rates. Even small member states can effectively weigh on the EUR, as seen in Greece during bailout talks in the 2010s. Alternatively, developments in the United States and the Federal Reserve commonly affect the EUR/USD. Many examples include the bailouts during the Financial crisis, tax cuts during the Trump Administration, and Covid-19 relief measures, among others.

The EUR/USD is the currency pair encompassing the European Union’s single currency, the euro (symbol €, code EUR), and the dollar of the United States (symbol $, code USD). The pair’s rate indicates how many euros are needed in order to purchase one dollar. For example, when the EUR/USD is trading at 1.2, it means 1 euro is equivalent to 1.2 dollars.  Why the EUR/USD is the Most Popular Trading PairCompared to all tradable currencies, the euro (EUR) is the world’s second most traded currency, behind only the US dollar. This currency pair is the most traded and liquid currency pair on the market.As the most popular trading pair, the EUR/USD is a staple of every brokerage offering and often has some of the lowest spreads relative to other pairs. Ultimately, the currency follows the two most economic blocs in the world and sees the most volume for this reason.The EUR/USD has a wide range of factors that influence its rates. From the EUR side, economic data in the Eurozone as well as internal factors in the bloc can easily impact rates. Even small member states can effectively weigh on the EUR, as seen in Greece during bailout talks in the 2010s. Alternatively, developments in the United States and the Federal Reserve commonly affect the EUR/USD. Many examples include the bailouts during the Financial crisis, tax cuts during the Trump Administration, and Covid-19 relief measures, among others.
Read this Term
tumbled on the Russian invasion of Ukraine. The currency pair is down -1.26% on the day, with a high of 1.1312 and a low of 1.1156. The low has pushed the price below the 2021 trading low of 1.1185, but still remains above the 2022 and January low of 1.11207.

Looking at the daily chart above, the sharp move to the downside today saw the price move below a swing level at 1.1273, another swing level going back to December at 1.1220, and the aforementioned low from 2021 at 1.1185. Those levels are now topside resistance on any snapback rally.

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Drilling into the 4- hour chart below gives a more detailed view of the technical bias and risk/target levels.

First going back to January, the price moved below the swing low from 2021 (on January 27) at 1.11853. On January 28 there was a corrective high near 1.1173. On January 31, the price moved above the 1.1173 to 1.11853 area and that started the run higher in the pair.

That area between 1.1173 and 1.11853 (see green numbered circles) is now close resistance intraday. Stay below is the best case scenario for the bears/sellers.

Move above that area, and traders will start to look toward another swing area between 1.12218 and 1.1234 (see red numbered circles). The 38.2% of the last trend leg lower is also in that area increasing the areas importance.

If the price can move above that area on a corrective move going forward, it would disappoint the sellers and should lead to more upside probing. Absent that, and the sellers still are more in control

Summary: The invasion news today has pushed the EURUSD outside what has been a period of ups and downs going back to November 9. One of the major downside lows has been taken out at 1.1185, but the lowest low remains at 1.11207.

Watch 1.1173 to 1.1185 as close intraday resistance now. Stay below and the traders will continue to target the lowest low.

EURUSD

EURUSD on the 4-hour chart
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A.R Chowdhury

A.R Chowdhury

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