EUR/USD Daily Forecast – Test Of Support At 1.2120

EUR/USD Video 26.01.21.

Euro Is Losing Ground Against U.S. Dollar

EUR/USD is currently trying to settle below the nearest support level at the 20 EMA at 1.2120 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index is testing the resistance level at 90.50. If this test is successful, the U.S. Dollar Index will gain additional upside momentum and head towards the next resistance level at 90.70 which will be bearish for GBP/USD.

Doubts about the size of the new U.S. stimulus package have recently provided some support to the American currency on the foreign exchange market.

U.S. President Joe Biden has already signaled that he was ready to negotiate the eligibility details of the proposed $1,400 stimulus checks while U.S. Senate Majority Leader Chuck Schumer stated that Democrats might try to pass the stimulus bill with a majority vote.

Traders will also begin to prepare for the U.S. Fed Interest Rate Decision which will be announced on Wednesday. The interest rate is expected to stay unchanged but the market will be very sensitive to Fed’s comments about the current state of the economy and the outlook for the future.

Technical Analysis

EUR/USD is currently testing the nearest support level at the 50 EMA at 1.2120. If this test is successful, EUR/USD will move towards the next support level at 1.2080. RSI is in the moderate territory, and there is plenty of room to gain additional downside momentum in case the right catalysts emerge.

If EUR/USD gets below the support at 1.2080, it will move towards the next support level which is located near January lows at 1.2060. A successful test of this level will open the way to the test of the next support at 1.2040.

On the upside, a move above 1.2130 will push EUR/USD towards the resistance level which is located at the 20 EMA at 1.2155. In case EUR/USD manages to settle above the resistance at 1.2155, it will head towards the next resistance at 1.2175.

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