EUR/USD Daily Forecast – Euro Stays Strong Against U.S. Dollar

U.S. Dollar Is Losing Ground Against Euro

EUR/USD continues its attempts to settle above the resistance at 1.1830 while the U.S. dollar is moving lower against a broad basket of currencies.

The U.S. Dollar Index is currently testing the support level at the 50 EMA at 92.45. A successful test of this level will open the way to the test of the next support at 92.30 which will be bullish for EUR/USD.

Yesterday, ECB left the interest rate unchanged and stated that it will reduce the pace of asset purchases under the pandemic emergency purchase programme. However, this reduction will be moderate.

Despite dovish commentary, ECB decision to reduce the pace of asset purchases provided some support to euro, although it remains to be seen whether euro will be able to gain sustainable upside momentum.

Foreign exchange market traders will also take a look at U.S. Producer Prices data today. Analysts expect that Producer Prices increased by 0.6% month-over-month in August. In case this report exceeds analyst expectations, it may provide some support to U.S. dollar.

Technical Analysis

EUR/USD managed to get above the 50 EMA and is trying to settle above the resistance at 1.1830. In case this attempt is successful, EUR/USD will move towards the next resistance level which is located at 1.1860.

A successful test of the resistance at 1.1860 will open the way to the test of the next resistance at 1.1880. If EUR/USD gets above this level, it will move towards the resistance level at 1.1900.

On the support side, EUR/USD needs to get below the 50 EMA which is located near 1.1825 to have a chance to develop downside momentum in the near term. The next support level is located at the 20 EMA. A move below the 20 EMA will indicate that EUR/USD will try to develop additional downside momentum.

If EUR/USD settles below the 20 EMA, it will get to the test of the next support at 1.1800. A successful test of this level will push EUR/USD towards the support at 1.1775.

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