EUR/USD Daily Forecast – Test Of Support At 1.2060

EUR/USD Video 02.02.21.

Euro Is Mostly Flat Against U.S. Dollar

EUR/USD is testing the support level at 1.2060 while the U.S. dollar is flat against a broad basket of currencies.

The U.S. Dollar Index is currently trying to get above the 91 level. The nearest significant resistance for the U.S. Dollar Index is located at 91.10. If the U.S. Dollar Index manages to settle above this level, it will move towards 91.50 which will be bearish for EUR/USD.

Yesterday, Germany reported that Retail Sales declined by 9.6% month-over-month in December compared to analyst consensus which called for a decline of just 2.6%. The collapse of Germany’s Retail Sales indicates that virus-related restrictions put significant pressure on consumer activity which is bad for the economy.

The disappointing Retail Sales report put material pressure on the euro which continues to move lower against the U.S. dollar as foreign exchange market traders expect that Euro Area economy will remain under significant pressure in the first quarter.

Today, traders will have a chance to take a look at Euro Area GDP Growth Rate for the fourth quarter. Analysts expect that Euro Area GDP declined by 1% on a quarter-over-quarter basis. Year-over-year, GDP is projected to decline by 5.4%.

Technical Analysis

EUR/USD is currently trying to settle below the nearest support level at 1.2060. If this attempt is successful, EUR/USD will move towards the next support level which is located at 1.2040.

A successful test of the support at 1.2040 will push EUR/USD towards the psychologically important support level at 1.2000. I’d expect a lot of interest from traders if EUR/USD declines towards the support at 1.2000.

In case EUR/USD gets below 1.2000, it will gain additional downside momentum and head towards the next support level at 1.1965.

On the upside, the nearest resistance for EUR/USD is located at 1.2080. If EUR/USD gets above this level, it will head towards the next resistance at the 50 EMA at 1.2115. A move above the 50 EMA will open the way to the test of the next resistance at the 20 EMA at 1.2135.

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