EUR/USD Daily Forecast – Test Of Resistance At 1.2250

EUR/USD Video 18.12.20.

Euro Remains Strong Ahead Of The Weekend

EUR/USD is trying to settle above the resistance at 1.2250 while the U.S. dollar tries to rebound against a broad basket of currencies.

The U.S. Dollar Index received support near 89.75 and is trying to settle above the 90 level. If this attempt is successful, the U.S. Dollar Index will move towards 90.15 which will be bearish for EUR/USD.

Yesterday, EU reported that Euro Area Inflation Rate decreased by 0.3% year-over-year in November while Core Inflation Rate grew by 0.2%, in line with analyst estimates. There are no signs of any meaningful inflation in EU as the economy remains under significant pressure from the second wave of the virus.

Today, foreign exchange market traders will wait for additional news about Brexit negotiations. Recent reports suggested that negotiations have stalled which put some pressure on the British pound but had no impact on EUR/USD.

Traders will also focus on U.S. stimulus negotiations. Republicans and Democrats are close to a compromise deal but additional talks may be required to work on some details of the new coronavirus aid package.

Technical Analysis

EUR/USD is currently testing the nearest resistance level at 1.2250. RSI is in the overbought territory but there is some room to gain additional upside momentum in case the right catalysts emerge.

In case EUR/USD manages to settle above 1.2250, it will head towards the next resistance level at 1.2280. A successful test of the resistance at 1.2280 will push EUR/USD towards the next resistance at 1.2330. If EUR/USD settles above 1.2330, it will move towards the resistance at 1.2360.

I’d note that EUR/USD has not visited this territory since 2018 so it remains to be seen whether previous levels will be relevant for today’s trading.

On the support side, the previous resistance level at 1.2220 will serve as the first support level for EUR/USD. If EUR/USD declines below this level, it will head towards the next support at 1.2175. A move below 1.2175 will open the way to the test of the support at 1.2155.

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