EUR/USD Daily Forecast – Test Of Support At 1.2220

EUR/USD Video 22.12.20.

U.S. Dollar Gains Ground Against Euro

EUR/USD is trying to settle below the support at 1.2220 while the U.S. dollar is gaining ground against a broad basket of currencies.

Yesterday’s trading session was very volatile, and the U.S. Dollar Index moved closer to the 90 level after testing the resistance at 91. Today, the U.S. Dollar Index is trying to gain additional upside momentum and is currently located near 90.30. If the U.S. Dollar Index gets to the test of the nearest resistance at 90.50, EUR/USD will find itself under some pressure.

On Monday, EU reported that Consumer Confidence increased from -17.6 in November to -13.9 in December. Analysts projected that Consumer Confidence would grow to -16.8 so the report was better than expected.

However, it should be noted that Consumer Confidence will likely take a hit at the end of this month due to the new COVID-19 strain which emerged in UK.

Interestingly, foreign exchange market traders have mostly ignored the new U.S. stimulus package which was approved on Monday as worries about the new coronavirus strain boosted demand for safe haven assets.

Technical Analysis

EUR/USD is currently testing the nearest support level at 1.2220. If this test is successful, EUR/USD will gain additional downside momentum and head towards the next support at 1.2175. There are no important levels between 1.2175 and 1.2220 so this move may be fast.

If EUR/USD settles below the support at 1.2175, it will move towards the support at 1.2155. A move below this level will open the way to the test of the next support level at the 20 EMA at 1.2135.

The 20 EMA will likely serve as a major support level for EUR/USD, and I’d expect a lot of interest from traders in case EUR/USD gets to another test of this level.

On the upside, the nearest significant resistance level for EUR/USD is located at 1.2250. This resistance level was tested during yesterday’s trading session and proved its strength. If EUR/USD settles above this level, it will head towards the next resistance which is located near the recent highs at 1.2280.

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