22.09.202216:35 Forex Analysis & Reviews: EUR/USD in the long-term bear market zone

Exchange Rates 22.09.2022 analysis

According to the ECB Economic Bulletin released on Thursday, the Governing Council expects further interest rate hikes "as inflation remains too high and is likely to remain above target for an extended period." According to ECB economists, "core inflation will remain high in the near term," although it will then fall "to an average level of 5.5% in 2023 and 2.3% in 2024."

This is a bullish signal for the euro. Nevertheless, growing concerns about the prospects for economic development, despite the prospects for further tightening of the ECB's monetary policy, put pressure on the euro and the EUR/USD pair, respectively.

Especially since, as follows from yesterday's statements by Fed Chairman Jerome Powell, the leadership of the central bank intends to continue to carry out an extra tough cycle of monetary policy. While this also poses a threat to the recovery of the American economy, it is still in better conditions than that of Europe, given the difficult energy and geopolitical situation in the euro area due to the events in Ukraine, while the United States is itself the largest energy producer.

"Today, we've just moved probably into the very, the very lowest level of what might be restrictive. There is a ways to go," Powell said yesterday.

Exchange Rates 22.09.2022 analysis

Thus, from a fundamental point of view, we should expect at least the preservation of a strong bearish momentum in the EUR/USD pair and, at most, a further fall of the pair towards 20-year lows, when it was trading near 0.8700, 0.8600.

The breakdown of today's and multi-year lows at 0.9810 may be a confirming signal of our assumption and an increase in short positions on the pair.

Exchange Rates 22.09.2022 analysis

In an alternative scenario, and after the breakdown of the short-term resistance level 0.9900 (200 EMA on the 15-minute chart), the EUR/USD correction may find development to the resistance levels 0.9966 (200 EMA on the 1-hour chart), 1.0010 (144 EMA on the 4-hour chart).

The pair remains in the area of the long-term bearish market (below the resistance levels 1.0610 (200 EMA on the daily chart), 1.1300 (200 EMA on the weekly chart), below which short positions remain preferable.

Support levels: 0.9810, 0.9800

Resistance levels: 0.9900, 0.9966, 1.0000, 1.0010, 1.0044, 1.0100, 1.0195

Trading Tips

Sell Stop 0.9840. Stop-Loss 0.9910. Take-Profit 0.9800, 0.9700, 0.9600

Buy Stop 0.9910. Stop-Loss 0.9840. Take-Profit 0.9966, 1.0000, 1.0010, 1.0044, 1.0100, 1.0195

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Jurij Tolin,
Analytical expert of InstaForex
© 2007-2022
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