EUR/USD Technical Analysis: Anticipating ECB Decisions

Today, with the most important event for the euro pairs in the forex market, where the European Central Bank will announce its monetary policy decisions. Despite expectations that the bank will keep interest rates unchanged, the general trend for global central banks, as we watch daily to raise interest rates, investors and analysts are counting on the Central Bank to change and point to the imminent date of tightening his policy.

This explains the upward trend of the EUR/USD currency pair since yesterday, stable around the 1.0892 level, and the most popular currency pair in the currency market crashed to the support level 1.0809 this week.

It must be emphasized that the Russian war has increased pressure on the single European currency, in addition to the consequences of the pandemic, and the exclusion of an imminent date for tightening the European Central's policy. Economic institutes advising the German government cut their forecasts for Europe's largest economy - Germany - and warned that a complete halt to Russian natural gas imports would lead to a “severe recession”. The five think tanks said in joint forecasts that German growth this year will slow to 2.7% before rebounding to 3.1% in 2023. The numbers compare with previous forecasts for growth of 4.8% and 1.9%. Inflation will average 6.1% in 2022 - the most in 40 years.

Commenting on this, Stefan Kothes, Vice President of the Kiel Institute for the World Economy, said: “The shock waves from the war in Ukraine are weighing on economic activity on the supply and demand sides.” the prices.

The report warned that an immediate disruption to Russia's energy supply could jeopardize 220 billion euros ($238 billion) of economic output in 2022 and 2023. “It would then be important to support marketable production structures without halting structural change,” Kothes added, urging makers to Policies not to provide “poorly targeted transfers to mitigate higher energy prices.”

Germany's industry-heavy economy is facing major hurdles after the war in Ukraine sent energy prices soaring while disrupting supply chains that were already reeling from pandemic-related crises. Inflation hit 7.6% in the first full month of the war - the highest level since records began after reunification in the early 1990s. Companies are seen as particularly vulnerable because of Germany's dependence on Russian gas, which the government wants to reduce. Last week, the ruling coalition approved an aid package for struggling companies that includes loans, loan guarantees and capital injections, aimed at helping energy companies in particular.

German industry leaders, including Christian Sewing, chief executive of Deutsche Bank AG, have warned of dire economic consequences if Russian energy supplies are cut off.

According to the technical analysis of the pair: The recent rebound attempt of the EUR/USD did not get the currency pair out of its bearish track, as it is still closer to testing the 1.0800 psychological support, which confirms the bears' control of the trend. The currency pair's path may change if it returns to the 1.1200 resistance area, according to the performance on the daily chart. As mentioned before, any attempts by the euro to recover to the highest selling opportunities will remain as long as the Russian war persists and as long as the divergence in economic performance and the future of central bank policy is in favor of the dollar.

Regarding the economic calendar data today: The European Central Bank will announce the update of its monetary policy decisions, and attention will be given to the event in the tone of its policy statement and the statements of ECB Governor Lagarde. On the US dollar front, we will be on a date with a package of the latest important economic data for this week, as the US retail sales numbers will be announced, along with the number of weekly jobless claims and US consumer confidence from Michigan.