EUR/USD Daily Forecast – Test Of The 50 EMA LevelEUR/USD continues to lose ground as traders worry about a potential second wave of lockdowns in Europe.
EUR/USD Video 22.09.20.
Euro Remains Under Pressure
EUR/USD is trying to settle below the 50 EMA at 1.1760 as the U.S. dollar continues to gain ground against a broad basket of currencies on worries about the potential second wave of lockdowns in Europe.
Currently, the market is focused on the recent developments in the UK where the government is expected to announce new restrictions. However, the situation is also very challenging in Spain and France, and additional virus containment measures in these countries should not be ruled out.
If various restrictions on mobility and partial lockdowns spread across the continent, euro may find itself under serious pressure.
The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, is currently trying to get to the test of the 50 EMA level at 93.80.
If the U.S. Dollar Index manages to settle above the 50 EMA, it will gain more upside momentum and get above the 94 level which will be bearish for EUR/USD. RSI of the U.S. Dollar Index is in the moderate territory despite the recent upside move so there is plenty of room to gain additional momentum.
EUR/USD is currently trying to gain more downside momentum below the 50 EMA at 1.1760. If EUR/USD manages to settle below the 50 EMA, it will have a good chance to develop a material downside trend.
The next support for EUR/USD is located at 1.1715. A move below the support level at 1.1715 will open the way to the test of the next support at 1.1695.
The support at 1.1695 is the low that was reached in early August. If EUR/USD settles below this support level, it may gain strong downside momentum as the upside move in July was very fast and no material levels were formed between 1.1500 and 1.1700.
On the upside, EUR/USD needs to get above the 50 EMA to have a chance to rebound. If EUR/USD manages to settle above 1.1760, it will head towards the next resistance level at the 20 EMA at 1.1820.
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