EUR/USD Daily Forecast – Resistance At 1.1880 In Sight

EUR/USD Video 17.08.20.

U.S. Dollar Loses Ground Amid Falling U.S. Government Bond Yields

EUR/USD continues to gain ground amid uncertainty over the new U.S. coronavirus aid package and falling U.S. government bond yields.

The U.S. Dollar Index, which measures the strength of the American currency against a broad basket of currencies, has managed to get below the 93 level and is trying to gain more downside momentum.

If the U.S. dollar finds itself under more pressure, the U.S. Dollar Index will head towards recent lows at 92.50. A move below this support level will likely lead to a sell-off, pushing EUR/USD above its recent highs.

In recent days, rising U.S. government bond yields provided some support to the U.S. dollar. This support was not sufficient enough to push the American currency higher. However, it managed to prevent a more serious slide in the U.S. Dollar Index.

Today, the U.S. government bond yields are under pressure which is bearish for U.S. dollar and bullish for EUR/USD.

The EU has successfully negotiated its coronavirus aid package while the U.S. economy clearly needs more stimulus to support consumer activity. However, the U.S. lawmakers won’t return to negotiations until September so the U.S. dollar may face increasing pressure in the second half of August.

Technical Analysis

EUR/USD continues its move towards the nearest resistance level at 1.1880. In case the test of this resistance level is successful, EUR/USD will head towards the next resistance at the recent highs at 1.1910.

A move above 1.1910 will signal that EUR/USD is ready to continue its upside trend after a period of consolidation. In this scenario, EUR/USD will gain more upside momentum and head towards 1.2000.

On the support side, the nearest support level for EUR/USD is located at the previous resistance at 1.1800. If EUR/USD manages to settle below this level, it will head towards the major support at the 20 EMA at 1.1760.

A move below the 20 EMA will mark the end of the current upside momentum and present a serious problem for EUR/USD bulls. In this scenario, a sell-off will likely follow.

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