EUR/USD Daily Forecast – U.S. Dollar Gains Ground As Treasury Yields Move Higher

EUR/USD Video 12.03.21.

Euro Is Losing Ground Against U.S. Dollar

EUR/USD is currently trying to settle below the support at 1.1965 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index gained upside momentum and managed to get above 91.50. Treasury yields continue to move higher, providing support to the American currency. The nearest resistance level for the U.S. Dollar Index is located at 91.75. If the U.S. Dollar Index manages to settle above this level, it will head towards the next resistance at 92 which will be bearish for EUR/USD.

Yesterday, European Central Bank left the interest rate unchanged at 0%. The deposit facility rate was also unchanged at -0.5%. Meanwhile, ECB stated that it will increase the pace of asset purchases in order to curb the recent rise in bond yields. At this point, it looks like traders will focus on rising U.S. yields as Fed did not share any specific plans on how it will deal with the current situation.

Today, foreign exchange market traders will have a chance to take a look at Euro Area Industrial Production data. Analysts expect that Industrial Production increased by 0.2% month-over-month in January. On a year-over-year basis, Industrial Production is projected to decline by 2.4%.

Technical Analysis

EUR/USD lost momentum and moved below the support at 1.1965. The next support level for EUR/USD is located at 1.1925. If EUR/USD declines below this support level, it will head towards the next support at 1.1900.

A successful test of the support at 1.1900 will open the way to the test of the next support which is located at 1.1880. If EUR/USD declines below this level, it will head towards the support at 1.1850.

On the upside, the previous support at 1.1965 will serve as the first resistance level for EUR/USD. If EUR/USD manages to get back above this level, it will head towards the next resistance at 1.2000. A move above this level will push EUR/USD towards the resistance at 1.2040.

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