EUR/USD Daily Forecast – Euro Gains Some Ground Ahead Of Inflation Data

Euro Moves Higher Against U.S. Dollar

EUR/USD continues to trade near 1.1300 while U.S. dollar is losing some ground against a broad basket of currencies.

The U.S. Dollar Index is currently trying to settle below 96.25. In case the U.S. Dollar Index manages to gain additional downside momentum, it will ead towards the support at 96 which will be bullish for EUR/USD.

Today, foreign exchange market traders will focus on economic data from EU. Analysts expect that Euro Area Inflation Rate increased by 4.7% year-over-year in December. Euro Area Core Inflation Rate is expected to grow by 2.5% year-over-year.

Euro Area Retail Sales report is projected to show that Euro Area Retail Sales declined by 0.5% month-over-month in November. On a year-over-year basis, Retail Sales are expected to grow by 5.6%.

Analysts expect that the final reading of Euro Area Consumer Confidence report will show that Euro Area Consumer Confidence declined from -6.8 in November to -8.3 in December. Euro Area Industrial Sentiment is expected to decrease from 14.1 in November to 13.9 in December, while Euro Area Services Sentiment is projected to decline from 18.4 to 16.

In the U.S., Non Farm Payrolls report is expected to show that economy added 400,000 jobs in December. Analysts expect that U.S. Unemployment Rate decreased from 4.2% in November to 4.1% in December.

Technical Analysis

EUR/USD is currently trying to settle back above 1.1300. In case this attempt is successful, EUR/USD will move towards the next resistance level at the 20 EMA at 1.1315.

A move above this level will open the way to the test of the resistance at 1.1330. In case EUR/USD gets above the resistance at 1.1330, it will move towards the resistance at the 50 EMA at 1.1350.

On the support side, EUR/USD needs to settle back below 1.1300 to have a chance to gain downside momentum in the near term. The next support level for EUR/USD is located at 1.1270.

If EUR/USD declines below 1.1270, it will move towards the support at 1.1230. A successful test of this level will push EUR/USD towards the support at 1.1200.

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