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22.02.202209:27 Forex Analysis & Reviews: EUR/USD, GBP/USD trading plan on February 22, 2022

Although yesterday was a holiday in the US and trading was supposed to be slow, the European market was fluctuating wildly. In the first half of the day, the single European currency was steadily rising amid positive data on business activity in the eurozone. For instance, the PMI in the services sector soared to 55.8 from 51.1 while analysts predicted a rise to just 51.7. Such impressive growth completely offset the decline in the manufacturing PMI to 58.4 from 58.7, given that experts predicted it to be at 58.5. As a result, the euorzone composite PMI, which was expected to rise to 52.5 from 52.3, actually advanced to 55.8.

Composite PMI (Eurozone):

Exchange Rates 22.02.2022 analysis

A very similar picture was observed in the UK. The only thing that could disappoint investors is the data on the manufacturing PMI. The indicator was expected to rise to 57.6 from 57.3 but instead, it stayed unchanged. At the same time, the services PMI jumped to 60.8 from 54.1, while it was projected to increase to 55.5 in the best-case scenario. This pushed the composite PMI up to 60.2 instead of the expected rise to 55.3 from 54.2.

Composite PMI (UK):

Exchange Rates 22.02.2022 analysis

However, everything changed in the afternoon, and the US dollar began to rise rapidly. The reason for this was that Russia recognized the independence of Donetsk and Lugansk and agreed to provide military support to the separatists. In response to this, the US announced sanctions against Russia that should come into force today. These events sparked panic in the market. Investors are at a loss while seeking ways to minimize risks. The situation in Europe may get out of control at any moment meaning that all European assets are becoming high-risk investments. It is hard to predict what will happen next, so investors are determined to flee from risk and uncertainty. The situation will remain unchanged at least until the US announces new sanctions. Just like in the situation with Crimea, European countries could as well suffer from sanctions imposed on Russia.

EUR/USD moved lower from the level of 1.1400 to reach the support area from the previous week. Consolidation below 1.1280 will extend the weakness of the euro and prompt new short positions on the pair.

Exchange Rates 22.02.2022 analysis

GBP/USD is trading near the level of 1.3600 with low activity. At the moment, the market may be accumulating volumes which may later result in an accelerated movement of the price. Therefore, you should monitor any momentum that occurs in the course of trading as it may indicate the further direction of the pair.

Exchange Rates 22.02.2022 analysis

*A análise de mercado aqui postada destina-se a aumentar o seu conhecimento, mas não dar instruções para fazer uma negociação.

Mark Bom,
Analytical expert of InstaSpot
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