EUR/USD Daily Forecast – Test Of Resistance At 1.2280

EUR/USD Video 30.12.20.

Euro Moves To Yearly Highs

EUR/USD is currently trying to settle above the resistance at 1.2280 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index gained strong downside momentum and is trying to settle below the support at the yearly lows at 89.75. A move below this support level will open the way to the test of the next support at 89.40 which will be bullish for EUR/USD. The American currency is losing ground despite diminishing chances of increased stimulus checks as demand for riskier currencies remains strong.

The U.S. has recently discovered the first case of the British COVID-19 strain which is more contagious than the ordinary one. Britain has significant problems with this new strain, and it has recently reported more than 53,000 cases in one day.

This strain may present a serious problem for the world economy if it spreads actively outside UK but foreign exchange market traders ignore this risk and buy riskier assets.

Technical Analysis

EUR/USD is testing the nearest resistance level at 1.2280. RSI has entered into the overbought territory. However, it is located below December highs, and there is plenty of room to gain additional momentum, although the risks of a pullback are increasing.

In case EUR/USD manages to settle above the resistance at 1.2280, it will head towards the next resistance level at 1.2325. EUR/USD has not visited this territory for several years so it is not clear whether previous levels will be relevant for today’s trading.

In case EUR/USD gains sufficient momentum, it may move very fast between levels. A move above the resistance at 1.2325 will push EUR/USD towards the next resistance level at 1.2350.

On the support side, the previous resistance at 1.2250 will likely serve as the first support level for EUR/USD. If it manages to settle below this level, it will head towards the next support at 1.2220. A move below the support at 1.2220 will open the way to the test of the support at the 20 EMA at 1.2175.

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