EUR/USD Daily Forecast – Test Of Support At 1.2040

EUR/USD Video 18.02.21.

Euro Is Mostly Flat Against U.S. Dollar

EUR/USD is currently testing the support at 1.2040 while the U.S. dollar is flat against a broad basket of currencies.

The U.S. Dollar Index is currently stuck in the range between 90.90 and 91. If the U.S. Dollar Index manages to get above the 91 level, it will head towards the resistance level at 91.10 which will be bearish for EUR/USD.

Today, foreign exchange market traders will focus on the economic data from the U.S. Initial Jobless Claims report is expected to show that 765,000 Americans filed for unemployment benefits in a week. Continuing Jobless Claims are projected to decline from 4.55 million to 4.4 million.

Traders will also have a chance to take a look at U.S. housing data. Building Permits are expected to decline by 3.5% month-over-month in January while Housing Starts are projected to decrease by 0.7%.

The market will also remain focused on the developments in the U.S. government bond market. Treasury yields have pulled back from recent highs but this move did not put any pressure on the U.S. dollar. If yields continue to increase, the U.S. dollar may get additional support.

Technical Analysis

EUR/USD managed to settle below the support level at 1.2060 and is trying to settle above the next support level which is located at 1.2040. EUR/USD made an attempt to settle below this level during yesterday’s trading session but failed to develop sufficient downside momentum.

If EUR/USD declines below the support at 1.2040, it will head towards the next support level at 1.2000. There are no important levels between 1.2000 and 1.2040 so this move may be fast. In case EUR/USD settles below the support at 1.2000, it will head towards the next support level at 1.1965.

On the upside, the previous support at 1.2060 will serve as the first resistance level for EUR/USD. If EUR/USD manages to settle above this level, it will head towards the next resistance at 1.2080. A move above this level will open the way to the test of the resistance at the 20 EMA at 1.2095.

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