EUR/USD has managed to get above the resistance at 1.1910 and continues its upside move amid the never-ending weakness of the U.S. dollar.
The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, has settled below the key support level at 92.50 and tries to get below the next support level at 92.10.
The American currency is under significant pressure and remains in a strong downside trend. In case the U.S. Dollar Index declines below 92.10, EUR/USD will get to new highs.
Today, traders will have a chance to digest new inflation data for the Euro Area. Analysts expect that Euro Area Inflation Rate decreased by 0.3% in July on a month-over-month basis. On a year-over-year basis, Inflation Rate is projected to grow by 0.4%. Meanwhile, Core Inflation Rate is expected to increase by 1.2% year-over-year.
Interestingly, the recent UK inflation data surprised to the upside, suggesting that the unprecedented stimulus measures were pushing prices higher despite the blow dealt by the coronavirus pandemic.
In case Euro Area inflation numbers are stronger the expected, euro will likely get additional support. At this point, it is obvious that the U.S. dollar will need strong catalysts to break the current downside trend.
EUR/USD settled above the resistance at 1.1910 and gained additional upside momentum. Currently, EUR/USD is trying to get to the test of the next resistance level at 1.2000.
In case EUR/USD manages to settle above 1.2000, it will head towards the next major resistance area near 1.2100. EUR/USD has not traded that high since 2018 and it remains to be seen whether previous levels will be in play in today’s trading.
Despite the strength of the recent upside move, RSI remains below highs reached in late July so there is more room to gain momentum in case the right catalysts emerge.
On the support side, the previous resistance level at 1.1910 will likely serve as the first important support level for EUR/USD. A move below this level will open the way to the test of the next support at 1.1800.
Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.