EUR/USD Forecast Today 22/02: Set to Rebound (Chart)

The EUR/USD exchange rate remained in a narrow range after a series of important events and macro data. It was trading at 1.1780, down from the year-to-date high of 1.2095.

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Geopolitical Tensions and Macro Data

The EUR/USD pair retreated after the Supreme Court ruled against Donald Trump’s tariffs on Friday. In a 6-3 ruling, the court said that Trump erred in using emergency powers to implement global tariffs last year.

The ruling ended Trump’s most important policy, which he has used to remake how the US trades with other countries. However, the president has more options to impose tariffs, some of which have been tested by the Supreme Court.

In a statement, Trump announced a new 15% tariff as he works on a more comprehensive plan to achieve the same goal.

The EUR/USD pair also remained under pressure after the US released the latest GDP and inflation report. Data showed that the economy grew by 1.4% in the fourth quarter, down by 4.4% in the third quarter.

The growth was much lower than the median estimate of 3%, with the government shutdown contributing to the slowdown.

Another report showed that the personal consumption expenditure (PCE) rose to 2.9% in December from the previous 2.8%. Core PCE, which strips the volatile food and energy prices, rose to 3% from 2.8%. On the positive side, a recent report showed that consumer inflation retreated to 2.4% in January.

The EUR/USD pair will react to the potential war between the United States and Iran, which will likely lead to higher inflation in the United States and Europe.

Looking ahead, the next important catalysts for the EUR/USD pair will be statements by Christine Lagarde and several Federal Reserve officials like Christopher Waller, Lisa Cook, Raphael Bostic, and Susan Collins.

There will be several key macro data, including the upcoming US consumer confidence report and European inflation.

EUR/USD Technical Analysis

The three-day chart shows that the EUR/USD exchange rate has pulled back in the past few days, moving from a high of 1.2093 in January to the current 1.1781. This retreat happened as geopolitical tensions rose and the US dollar rebounded.

The pair has remained slightly above the 50-day Weighted Moving Average (WMA). It has remained inside the ascending channel, while the two lines of the MACD indicator have retreated.

Therefore, the bullish outlook will likely remain as long as it is above the 50-day WMA and as long as the Supertrend indicator remains in the green. The key target to watch will be at 1.200.

Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.

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