EUR/USD Daily Forecast – U.S. Dollar Gains Ground Ahead Of Inflation Reports

Euro Is Losing Ground Against U.S. Dollar

EUR/USD is currently moving towards the support at 1.1560 while the U.S. dollar is moving higher against a broad basket of currencies.

The U.S. Dollar Index is moving towards the resistance level at 94.20. In case the U.S. Dollar Index manages to settle above this level, it will head towards the next resistance at 94.50 which will be bearish for EUR/USD.

Germany has recently reported that Inflation Rate grew by 0.5% month-over-month in October. On a year-over-year basis, Germany’s Inflation Rate increased by 4.5%. Both reports met analyst estimates.

Foreign exchange market traders will also focus on U.S. inflation data. In the U.S., Inflation Rate is projected to grow by 0.6% month-over-month in October. On a year-over-year basis, Inflation Rate is expected to increase by 5.8%. U.S. inflation reports will likely have a material impact on currency dynamics. The Fed has recently managed to calm market fears, but they can resurface in case inflation reports exceed analyst expectations.

Technical Analysis

EUR/USD declined below the support at 1.1580 and is trying to get to the test of the next support level at 1.1560. In case EUR/USD manages to settle below the support at 1.1560, it will head towards the next support level at 1.1540.

A successful test of the support at 1.1540 will push EUR/USD towards the support at 1.1525. If EUR/USD declines below this support level, it will move towards the next support level which is located at 1.1500.

On the upside, the previous support level at 1.1580 will serve as the first resistance level for EUR/USD. In case EUR/USD manages to settle back above this level, it will head towards the 20 EMA at 1.1595.

A move above the 20 EMA at 1.1595 will open the way to the test of the next resistance level which is located at 1.1610. If EUR/USD gets above 1.1610, it will move towards the resistance level at 1.1630.

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