EUR/USD Daily Forecast – Test Of Support At 1.1765

EUR/USD Video 09.09.20.

Euro Continues To Lose Ground

EUR/USD is trying to settle below the support level at 1.1765 as the U.S. dollar continues to gain ground against a broad basket of currencies.

The U.S. Dollar Index has recently managed to get above 93.50 and is trying to gain more upside momentum. The continued sell-off in GBP/USD is playing a major role in the current U.S. dollar strength.

The next resistance level for the U.S. Dollar Index is located at the 50 EMA at 94.10. A move towards this level will be bearish for EUR/USD.

Yesterday, EU reported the third estimate of its second-quarter GDP Growth Rate. GDP declined by 11.8% on a quarter-over-quarter basis, compared to analyst consensus which called for a decline of 12.1%. On a year-over-year basis, GDP declined by as much as 14.7%.

Meanwhile, Employment Change report indicated that employment declined by 2.9% in the second quarter on a quarter-over-quarter basis.

The economic data from Euro Area remains mostly grim so traders will be waiting for clues about additional stimulus when the European Central Bank announces its Interest Rate Decision on Thursday.

While the rate is expected to stay unchanged at 0%, ECB may follow U.S. Fed’s example and promise to push inflation above 2% in order to support the economic recovery. This scenario would be bearish for EUR/USD.

Technical Analysis

Currently, EUR/USD is testing the nearest support level at 1.1765. If this test is successful, EUR/USD will gain more downside momentum and head towards the next support level at the 50 EMA at 1.1725.

RSI is still in the moderate territory so there is plenty of room to gain more momentum in case the right catalysts emerge. A move below the 50 EMA at 1.1725 will open the way to the test of the next support level at 1.1665.

On the upside, the nearest resistance for EUR/USD is located at the 20 EMA at 1.1825. A move above the 20 EMA will signal that EUR/USD is ready to get back to the upside mode so I’d expect a lot of interest from traders in case EUR/USD gets to the test of this level.

In case EUR/USD manages to settle above the 20 EMA, it will gain more upside momentum and head towards the next resistance at 1.1910.

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