EUR/USD Daily Forecast – Test Of Support At 1.1475

Euro Remains Under Pressure

EUR/USD is currently trying to settle below the support at 1.1475 while the U.S. dollar is moving higher against a broad basket of currencies.

The U.S. Dollar Index is testing the resistance level at 95. In case this test is successful, the U.S. Dollar Index will move towards the resistance at 95.20 which will be bearish for EUR/USD.

Yesterday, U.S. reported that Inflation Rate increased by 6.2% year-over-year while analysts expected that it would grow by 5.8%. Core Inflation Rate increased by 4.6% year-over-year compared to analyst consensus of 4.3%.

The reports provided significant support to U.S. dollar as traders focused on inflation risks. Currently, foreign exchange market traders expect that the Fed will be forced to raise rates in 2022. This scenario would be bullish for the U.S. dollar, while euro will find itself under pressure as it looks that ECB will remain dovish in the upcoming months.

Technical Analysis

EUR/USD managed to get below the support level at 1.1475 and is moving towards the next support level at 1.1450. RSI moved close to the oversold territory after yesterday’s sell-off, but there is enough room to develop additional downside momentum in case the right catalysts emerge.

In case EUR/USD manages to settle below the support level at 1.1450, it will move towards the next support level which is located at 1.1425. A successful test of this support level will open the way to the test of the next support at 1.1400.

On the upside, EUR/USD needs to get back above 1.1475 to have a chance to develop upside momentum in the near term. In case EUR/USD settles back above this level, it will move towards the resistance level at 1.1500.

A move above 1.1500 will push EUR/USD towards the resistance at 1.1525. If EUR/USD manages to settle above the resistance at 1.1525, it will continue its rebound and head towards the resistance level at 1.1540.

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