EUR/USD Daily Forecast – Test Of Support At 1.2175

EUR/USD Video 11.01.21.

Euro Is Under Pressure At The Start Of The Week

EUR/USD is testing the nearest support level at 1.2175 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index managed to get above the 20 EMA at 90.20 and made an attempt to get to the test of the next resistance level at 90.50. In case the U.S. Dollar Index settles above 90.50, it will gain additional upside momentum which will be bearish for EUR/USD.

Rising yields on U.S. government bonds are providing some support to the U.S. dollar. The yield on the 10-year U.S. government bonds has managed to climb above 1.10% compared to 0.92% at the end of 2020.

Foreign exchange market traders will also keep an eye on the latest developments in Washington as Democrats will try to push Trump out of office before his term ends.

On Wednesday, the U.S. will provide inflation data for December which may serve as an important catalyst given the recent sell-off in the U.S. government bond market. Core Inflation Rate is projected to grow by 1.6% year-over-year while Inflation Rate is expected to increase by 1.3%.

Technical Analysis

EUR/USD is currently trying to settle below the nearest support level at 1.2175. RSI is in the moderate territory, and there is plenty of room to gain additional downside momentum in case the right catalysts emerge.

In case EUR/USD declines below this level, it will head towards the next support level at 1.2155. A move below 1.2155 will push EUR/USD towards the support at the 50 EMA at 1.2110. A successful test of this level will open the way to the test of the next support level at 1.2080.

On the upside, the nearest resistance level for EUR/USD is located near the 20 EMA at 1.2220. A move above the 20 EMA will signal that EUR/USD will try to gain upside momentum after the pullback. In this case, EUR/USD will head towards the next resistance level which is located at 1.2250.

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