EUR/USD Daily Forecast – Support At 1.2000 In Sight

EUR/USD Video 02.03.21.

Euro Continues To Lose Ground Against U.S. Dollar

EUR/USD is moving towards the psychologically important support level at 1.2000 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index managed to settle above the resistance at 91.10 and is trying to get to the test of the next resistance level which is located at 91.30. A move above this level will push the U.S. Dollar Index towards the resistance at 91.50 which will be bearish for EUR/USD.

Yesterday, EU reported that Euro Area Manufacturing PMI increased from 54.8 in January to 57.9 in February compared to analyst consensus of 57.7. The manufacturing segment remained strong despite problems on the coronavirus front.

Today, foreign exchange market traders will focus on inflation data from the EU. Analysts expect that Inflation Rate increased by 0.3% month-over-month in February. On a year-over-year basis, Inflation Rate is projected to grow by 0.9%. Meanwhile, Core Inflation Rate is expected to grow by 1.1% year-over-year. There are no signs of any pricing pressure in the Euro Area.

Technical Analysis

EUR/USD managed to settle below the support at 1.2040 and is moving towards the next support level at 1.2000. RSI is moving closer to the oversold territory, but there is still plenty of room to gain additional downside momentum.

If EUR/USD declines below the support at 1.2000, it will head towards the next support level at 1.1965. This support level has been tested in early February and proved its strength. In case EUR/USD settles below the support at 1.1965, it will move towards the next support level at 1.1925.

On the upside, the previous support level at 1.2040 will serve as the first resistance level for EUR/USD. If EUR/USD manages to settle above the resistance at 1.2040, it will head towards the next resistance level which is located at 1.2060. A move above this level will open the way to the test of the resistance at 1.2080.

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