EUR/USD Daily Forecast – U.S. Dollar Continues To Lose Ground Against Euro

Euro Is Moving Higher Against U.S. Dollar

EUR/USD is currently trying to settle back above the resistance at 1.2130 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index has recently managed to get below 90.50 and is moving towards the support level at 90.30. In case the U.S. Dollar Index gets to the test of the support at 90.30, EUR/USD will get more support.

Today, foreign exchange market traders had a chance to take a look at the final reading of inflation report from Germany. Inflation Rate increased by 0.5% month-over-month in May. On a year-over-year basis, Inflation Rate grew by 2.5%.

Germany’s inflation report was in line with the analyst consensus, and traders’ focus will soon shift to economic data from the U.S. Producer Prices are projected to grow by 6.3% on a year-over-year basis, but it remains to be seen whether markets will worry about higher inflation.

The yield of 10-year Treasuries has recently made an attempt to settle above 1.50% but failed to gain sufficient upside momentum and pulled back. A move above 1.50% will open the way to the test of the 20 EMA at 1.55% which will be bullish for the U.S. dollar, but traders will likely wait for the Fed Interest Rate Decision on Wednesday before making big moves.

Technical Analysis

EUR/USD is currently testing the resistance at 1.2130. In case this test is successful, EUR/USD will move towards the next resistance level which is located at the 20 EMA at 1.2155.

A move above the 20 EMA will push EUR/USD towards the resistance at 1.2175. If EUR/USD manages to settle above this level, it will head towards the resistance at 1.2200.

On the support side, EUR/USD needs to get back below 1.2130 to have a chance to develop downside momentum in the near term. The next support level is located at 1.2115. It should be noted that the 50 EMA is in the nearby, so EUR/USD may get material support in the 1.2115 – 1.2130 range. If EUR/USD declines below the support at 1.2115, it will move towards the next support level at 1.2080.

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