EUR/USD Daily Forecast – Euro Pulls Back Against U.S. Dollar

U.S. Dollar Is Moving Higher Against Euro

EUR/USD is currently trying to settle back below the support at the 20 EMA at 1.1325 while U.S. dollar is moving higher against a broad basket of currencies.

The U.S. Dollar Index is testing the resistance level at 96. If this test is successful, the U.S. Dollar Index will move back to the resistance at 96.25 which will be bearish for EUR/USD.

Today, foreign exchange market traders had a chance to take a look at German trade data. Exports increased by 4.1% month-over-month in October compared to analyst consensus which called for growth of 0.9%. Imports grew by 5% compared to analyst consensus of 0.4%.

In the U.S., traders will focus on job market data. Initial Jobless Claims are expected to decline from 222,000 to 215,000 while Continuing Jobless Claims are projected to decrease from 1.96 million to 1.9 million.

It should be noted that markets may be a bit nervous ahead of tomorrow’s inflation data from U.S. Currently, analysts expect that U.S. Inflation Rate will increase by 6.8% year-over-year. If inflation exceeds analyst expectations, the Fed may be forced to cut its asset purchase program fast and start raising rates, which will provide more support to the U.S. dollar.

Technical Analysis

EUR/USD did not manage to get above the resistance level at 1.1350 and pulled back towards the support level at the 20 EMA at 1.1325.

If EUR/USD declines below the 20 EMA, it will move towards the next support level at 1.1300. A successful test of the support at 1.1300 will push EUR/USD towards the support at 1.1270. In case EUR/USD manages to settle below this level, it will move towards the next support level which is located at 1.1230.

On the upside, EUR/USD needs to settle above 1.1350 to continue its rebound. The next resistance level for EUR/USD is located at 1.1370. In case EUR/USD gets above this level, it will move towards the resistance at 1.1400.

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