EUR/USD Daily Forecast – Euro Tries To Continue Its Rebound

EUR/USD Video 21.08.20.

U.S. Dollar Loses Ground Amid Weaker U.S. Employment Data

EUR/USD is rebounding after recent sell-off as the U.S. dollar is losing ground against a broad basket of currencies.

U.S. Dollar Index has failed to settle above the 93 level and pulled back closer to 92.50 after the release of disappointing employment data in the U.S.

Today, traders will focus on Flash PMI data from Euro Area and U.S.

Euro Area Manufacturing PMI is expected to grow from 51.8 in July to 52.9 in August, while Services PMI is projected to decline from 54.7 to 54.5. Numbers above 50 show expansion.

In the U.S., Manufacturing PMI is expected to increase from 50.9 in July to 51.9 in August while Services PMI is projected to grow from 50 to 51.

Traders will pay close attention to the differences in the speed of recovery between Euro Area and the U.S.

The market believes that U.S. recovery may not be as strong as previously expected due to continued problems on the coronavirus front and failure to reach consensus on the new coronavirus aid package. This view has led to significant pressure on the American currency in recent months.

At this point, it is clear that the U.S. dollar will need additional strong catalysts to break the current downside trend.

Technical Analysis

EUR/USD continues its rebound and tries to get to the test of the nearest material resistance level at 1.1910.

RSI has declined to moderate levels after the recent sell-off so there is plenty of room to gain upside momentum in case the right catalysts emerge.

If EUR/USD is able to get above 1.1910, it will head towards the recent highs at 1.1965.

On the support side, the nearest support level for EUR/USD is located at the 20 EMA at 1.1800. This level has recently been tested and proved its strength.

I’d expect strong interest in EUR/USD near the 20 EMA since a move below this level will mark the end of the current upside momentum, and a sell-off may follow.

In this scenario, EUR/USD will gain additional downside momentum and head towards the test of the next support level at 1.1715.

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