EUR/USD Daily Forecast – Test Of Support At 1.1830
EUR/USD Video 26.10.20.
Euro Is Losing Ground Against U.S. Dollar At The Beginning Of The Week
EUR/USD is trying to settle below the nearest support level at 1.1830 as the U.S. dollar is moving higher against a broad basket of currencies.
The U.S. Dollar Index gained upside momentum and is trying to get above the resistance at 93.00. In case the U.S. Dollar Index manages to settle above this level, it will head towards the next resistance at the 20 EMA at 93.25 which will be bearish for EUR/USD.
U.S. Republicans and Democrats failed to reach consensus on the new coronavirus package deal over the weekend. While traders believe that U.S lawmakers will ultimately provide another round of stimulus to the economy, it will be hard to get the deal done before the election. At this point, the uncertainty about the timing of the new stimulus package provides support to the U.S. dollar.
In addition, the situation with coronavirus is getting worse in Europe. Yesterday, France reported more than 52,000 new cases of the disease. Spain announced a state of emergency while Italy ordered bars and restaurants to close early.
The recent Euro Area Services PMI report indicated that Services PMI declined from 48 in September to 46.2 in October. Numbers below 50 show contraction. Given the recent trends on the virus front, the situation in the services segment will continue to deteriorate which may put some pressure on the euro.
EUR/USD failed to settle above the resistance at 1.1870 and is testing the nearest support level at 1.1830. If this test is successful, EUR/USD will move towards the next support at the 20 EMA at 1.1790.
A move below the 20 EMA will push EUR/USD towards the 50 EMA at 1.1765. If EUR/USD manages to settle below the 50 EMA, it will get to the test of the major support level at 1.1750.
On the upside, EUR/USD needs to stay above 1.1830 to have a chance to develop additional upside momentum. A successful test of the nearest resistance level at 1.1870 will open the way to the test of the major resistance level at 1.1910.
For a look at all of today’s economic events, check out our economic calendar.