EUR/USD Daily Forecast – Test Of Resistance At 1.2220

EUR/USD Video 17.12.20.

Euro Gains Ground Against U.S. Dollar

EUR/USD is currently trying to settle above the resistance at 1.2220 while the U.S. dollar continues to move lower against a broad basket of currencies.

The U.S. Dollar Index developed strong downside momentum and is trying to settle below the psychologically important 90 level. The next material support level for the U.S. Dollar Index is located at 89.40, although the American currency may also get some support at higher levels. If the U.S. Dollar Index moves towards 89.40, EUR/USD will get an additional boost.

According to recent reports, EU and UK made progress in Brexit negotiations. The main beneficiary of this progress is the British pound but euro also gets some support.

Yesterday, EU provided flash PMI reports for December. Euro Area Manufacturing PMI increased from 53.8 to 55.5 while Euro Area Services PMI jumped from 41.7 to 47.3. Both reports exceeded analyst expectations. The strength of the services segment was especially surprising given the serious problems with coronavirus in Europe.

Today, foreign exchange market traders will have a chance to take a look at inflation data for November in the Euro Area. Analysts expect that Inflation Rate decreased by 0.3% year-over-year while Core Inflation Rate grew by 0.2%.

Technical Analysis

EUR/USD is testing the nearest resistance level at 1.2220. RSI is in the overbought territory so the risks of a pullback are increasing but the current momentum looks strong.

The next resistance level for EUR/USD is located at 1.2250. This resistance level has the potential to serve as a major obstacle on the way up for EUR/USD. In case EUR/USD settles above this level, it will head towards the next resistance at 1.2280.

On the support side, the nearest support for EUR/USD is located at 1.2175. There are no important levels between 1.2175 and 1.2220 so EUR/USD may quickly get to the test of the support at 1.2175 in case the U.S. dollar starts to rebound against a broad basket of currencies.

If EUR/USD declines below the support at 1.2175, it will get to the test of the next support at 1.2155. A move below 1.2155 will open the way to the test of the support at 1.2110.

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