Before you turn too bearish on EURUSD, you need to take a look at the chart below. This year we are looking at an even longer-term perspective, going back on the chart to around the euro’s inception in 1999.

Even at first glance, the below chart provides a compelling bullish case for EURUSD. The rising trendline going back to 2000 held off four bearish attempts in the past 20 years. It is obviously a major support area. Will there be a fifth rejection in 2022?

The above is the main question that we need to answer ourselves this year because based on that outcome, there can be two very opposition scenarios in play for EURUSD.

EURUSD chart scenarios:

• 1st bullish scenario – the support in the 1.10 area holds, and EURUSD potentially climbs above 1.15 or toward 1.20 this year. This seems like the more likely outcome to actually materialize. Helping to strengthen the support area here is the broken channel line (broke in summer 2020), which is now being tested from the other side.
• 2nd bearish scenario – the major support around 1.10 doesn’t hold. In this case, EURUSD could be facing a major bearish breakout and a huge sell-off. Under this scenario, not only EURUSD at parity (1.00) would come into view, but possibly even levels below it! This is because, as can be seen from the chart, once this big 20-year rising trendline is broken, there will be virtually nothing (from a technicals perspective) to hold the pair from falling further. While as unlikely as it appears, this scenario is the big risk for EURUSD in 2022.

With that all being said, it could be a long road before we get a resolution in either direction. After all, this is a monthly chart, and it could take some time for things to play out! It would likely be best to avoid taking any long-term positions before a clear bullish or bearish signal confirms the direction around the crucial support here.