EUR/USD Daily Forecast – Resistance At 1.1355 Stays Strong

U.S. Dollar Gains Ground Against Euro

EUR/USD is currently trying to settle back below the support at 1.1330 while U.S. dollar is moving higher against a broad basket of currencies.

The U.S. Dollar Index is currently trying to get to the test of the 96 level. If the U.S. Dollar Index moves above this level, it will head towards the next resistance at 96.25 which will be bearish for EUR/USD.

On Friday, EU reported that Euro Area Inflation Rate increased by 5% year-over-year compared to analyst consensus of 4.7%. Euro Area Core Inflation Rate increased by 2.6% year-over-year compared to analyst consensus of 2.5%. Euro Area inflation reports provided support to euro as some traders were willing to bet that ECB will change its dovish stance.

Meanwhile, Euro Area Retail Sales increased by 1% month-over-month in November compared to analyst consensus which called for a decline of 0.5%. Euro Area Industrial Sentiment increased from 14.3 in November to 14.9 in December while Euro Area Services Sentiment declined from 18.3 to 11.2 due to the new wave of coronavirus.

Today, foreign exchange market traders will focus on the Euro Area Unemployment Rate report for November. Analysts expect that Euro Area Unemployment Rate declined from 7.3% in October to 7.2% in November.

Technical Analysis

EUR/USD faced significant resistance near the 50 EMA at 1.1355 and pulled back. Currently, EUR/USD is testing the support which is located near the 20 EMA at 1.1330.

If EUR/USD declines below this level, it will head towards the next support at 1.1300. A move below the support at 1.1300 will open the way to the test of the support at 1.1270. In case EUR/USD declines below 1.1270, it will move towards the support at 1.1230.

On the upside, EUR/USD needs to stay above 1.1330 to have a chance to gain upside momentum in the near term. The next resistance level for EUR/USD is located at the 50 EMA at 1.1355.

If EUR/USD settles above the 50 EMA, it will move towards the resistance at 1.1370. A move above this level will push EUR/USD towards the resistance which is located near December highs at 1.1390.

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