EUR/USD Daily Forecast – Euro Gains Ground Ahead Of ECB Decision

U.S. Dollar Moves Lower Against Euro

EUR/USD is currently trying to settle back above 1.1300 while U.S. dollar is moving lower against a broad basket of currencies.

The U.S. Dollar Index is trying to settle below the support level at 96.25. If this attempt is successful, the U.S. Dollar Index will move towards the support at 96 which will be bullish for EUR/USD.

Yesterday’s Fed decision to cut its asset purchase program at a faster pace failed to provide sustainable support to the American currency. The markets were also unimpressed with the Fed’s expectation of three rate hikes in 2022.

Today, foreign exchange market traders will focus on ECB Interest Rate Decision and the subsequent commentary. The key question is whether ECB will be able to remain dovish despite the threat of inflation.

Traders will also take a look at Euro Area PMI reports. Analysts expect that Euro Area Manufacturing PMI decreased from 58.4 in November to 57.8 in December while Euro Area Services PMI declined from 55.9 to 54.1.

In the U.S., Initial Jobless Claims report is expected to show that 200,000 Americans filed for unemployment benefits in a week. Industrial Production is expected to grow by 0.7% month-over-month in November, while Manufacturing Production is also expected to increase by 0.7%.

Interestingly, U.S. Manufacturing PMI is projected to increase from 58.3 in November to 58.5 in December while Services PMI is expected to grow from 58 to 58.5 despite worries over the new variant of coronavirus.

Technical Analysis

 

EUR/USD is testing the resistance at 1.1300. In case this test is successful, EUR/USD will get to the test of the next resistance at the 20 EMA at 1.1310.

A successful test of the resistance at the 20 EMA will lead to the test of the next resistance level at 1.1330. In case EUR/USD manages to settle above this level, it will move towards the resistance at 1.1350. A move above 1.1350 will push EUR/USD towards the resistance at 1.1370.

On the support side, a move below 1.1300 will push EUR/USD back towards the support at 1.1270. If EUR/USD declines below 1.1270, it will head towards the support at 1.1230. In case EUR/USD manages to settle below this level, it will head towards the support at 1.1200.

For a look at all of today’s economic events, check out our economic calendar.