EUR/USD Daily Forecast – Test Of Support At 1.2080
EUR/USD Video 18.01.21.
U.S. Dollar Tries To Gain More Ground
EUR/USD is currently trying to settle below the support at 1.2080 while the U.S. dollar is gaining ground against a broad basket of currencies.
The U.S. Dollar Index gained upside momentum and is trying to settle above the 50 EMA at 90.95. In case this attempt is successful, the U.S. Dollar Index will move towards the next resistance level at 91.20 which will be bearish for EUR/USD.
Last Friday, the U.S. reported that Retail Sales declined by 0.7% month-over-month in December while analysts expected that they would remain unchanged. The report signaled that the second wave of the virus had already put material pressure on the consumer so the economy clearly needs another round of stimulus.
U.S. President-elect Joe Biden has recently unveiled his $1.9 trillion stimulus proposal. Interestingly, this announcement did not put any pressure on the U.S. dollar. It looks like some foreign exchange market traders believe that the proposed stimulus package is too ambitious and that even some Democrats may want to trim its size.
EUR/USD managed to settle below the 50 EMA at 1.2110 and is testing the next support level at 1.2080. In case EUR/USD manages to settle below this level, it will move towards the next support level at 1.2060.
A move below the support at 1.2060 will push EUR/USD towards the next support level at 1.2040. If EUR/USD declines below 1.2040, it will head towards the support at the psychologically important support level at 1.2000. There are no important levels between 1.2040 and 1.2000 so this move may be fast.
On the upside, the previous support at the 50 EMA at 1.2110 will likely serve as the first resistance level for EUR/USD. If EUR/USD manages to settle above this level, it will gain some upside momentum and head towards the next resistance which is located at 1.2130. A successful test of the resistance level at 1.2130 will open the way to the test of the next resistance at 1.2155.
For a look at all of today’s economic events, check out our economic calendar.