EUR/USD Daily Forecast – Euro Continues To Lose Ground Against U.S. Dollar
EUR/USD Video 05.03.21.
Rising Treasury Yields Provide Support To U.S. Dollar
EUR/USD is currently trying to settle below the support at 1.1965 while the U.S. dollar is gaining ground against a broad basket of currencies.
The U.S. Dollar Index managed to settle above the resistance at 91.50 and is testing the next resistance level which is located at 91.75. In case the U.S. Dollar Index settles above this level, it will move towards the next resistance at the 92 level which will be bearish for EUR/USD.
Yesterday, EU reported that Euro Area Retail Sales declined by 5.9% month-over-month in January compared to analyst consensus which called for a decline of 1.1%. On a year-over-year basis, Euro Area Retail Sales decreased by 6.4%. The report was much worse than analyst expectations and highlighted the current problems of the European economy. Meanwhile, U.S. Treasury yields moved to multi-month highs. In combination, these factors put significant pressure on the euro.
EU has also reported that Unemployment Rate remained unchanged at 8.1% (the previous reading was revised from 8.3% to 8.1%) but the market did not pay much attention to this data as it remained focused on rising yields and disappointing Euro Area Retail Sales report.
EUR/USD gained strong downside momentum and is testing the support level at 1.1965. If this test is successful, EUR/USD will move towards the next support level which is located at 1.1925.
RSI remains in the moderate territory despite the strength of the recent downside move so there is plenty of room to gain additional downside momentum in case the right catalysts emerge.
In case EUR/USD declines below the support at 1.1925, it will move towards the next support level at 1.1900. A move below this level will open the way to the test of the support at 1.1880.
On the upside, EUR/USD needs to get back above 1.1965 to have a chance to develop upside momentum in the near term. The next resistance level is located at 1.2000. If EUR/USD settles above this level, it will head towards the next support level at 1.2040.
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