EUR/USD Daily Forecast – Test Of Support At 1.2310

EUR/USD Video 07.01.21.

Euro Is Losing Ground Against U.S. Dollar

EUR/USD is testing the nearest support level at 1.2310 while the U.S. dollar is mostly flat against a broad basket of currencies.

The U.S. Dollar Index has settled near 89.50 and is trying to get to the test of the nearest support level at 89.40. The foreign exchange market’s reaction to yesterday’s unrest in Washington was limited, and it looks like traders may focus on Democrats’ election victories in Georgia which give them the control of the Senate and provide them with a chance to introduce larger stimulus packages. If the U.S. Dollar Index settles below the support at 89.40, it will gain additional downside momentum which will be bullish for EUR/USD.

Yesterday, U.S. ADP Employment Change report indicated that private businesses fired 123,000 workers in December while analysts expected that they would hire 88,000 workers. The report highlighted the need for additional stimulus as the second wave of the virus has started to put material pressure on the job market.

Today, traders will have a chance to take a look at the Euro Area Retail Sales data for November. Analysts expect that Retail Sales declined by 3.4% month-over-month. On a year-over-year basis, Retail Sales are projected to grow by 0.8%.

Meanwhile, Euro Area Inflation Rate is projected to decline by 0.2% year-over-year as prices remain under pressure from the economic blow dealt by the pandemic.

Technical Analysis

EUR/USD is currently trying to settle below the nearest support level at 1.2310. If EUR/USD declines below this level, it will head towards the next support at 1.2280.

A successful test of the support at 1.2280 will push EUR/USD towards the support at 1.2250. In case EUR/USD declines below the support at 1.2250, it will head towards the next support level which is located at the 20 EMA at 1.2230.

On the upside, EUR/USD needs to get back above 1.2325 to have a chance to continue its upside move. The next resistance level for EUR/USD is located at 1.2350. This resistance level has been tested during yesterday’s trading session and proved its strength. A move above the resistance at 1.2350 will push EUR/USD towards the next resistance level at 1.2400.

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