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

Euro Is Moving Lower Against U.S. Dollar

EUR/USD is trying to settle back below 1.1300 while U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index has recently managed to get above the resistance level at 96.25 and is moving towards the next resistance at 96.50. In case the U.S. Dollar Index manages to settle above 96.50, it will gain additional upside momentum and head towards the resistance at 96.70 which will be bearish for EUR/USD.

Today, foreign exchange market traders will take a look at Producer Prices data from EU. Analysts expect that Producer Prices increased by 1.2% month-over-month in November. On a year-over-year basis, Producer Prices are projected to grow by 22.9%.

In the U.S., traders will focus on Initial Jobless Claims report which is projected to show that 197,000 Americans filed for unemployment benefits in a week. Continuing Jobless Claims are expected to decrease from 1.72 million to 1.69 million.

Traders will also monitor the developments in U.S. government bond markets. Treasury yields gained strong upside momentum after FOMC Minutes indicated that Fed was ready to raise rates in the first half of 2022 and was also ready to reduce the size of its balance sheet if necessary. The yield of 10-year Treasuries is close to 2021 highs, and a move above this level will likely provide more support to the American currency.

Technical Analysis

EUR/USD continues its attempts to settle below the support level at 1.1300. In case EUR/USD settles below this level, it will move towards the support at 1.1270, which has been tested several times in recent weeks and proved its strength.

A move below 1.1270 will push EUR/USD towards the support at 1.1230. If EUR/USD gets below this important support level, it will head towards the support at 1.1200.

On the upside, a move above 1.1300 will push EUR/USD towards the 20 EMA at 1.1315. In case EUR/USD settles above the 20 EMA, it will head towards the resistance at 1.1330. A successful test of this level will push EUR/USD towards the resistance near the 50 EMA at 1.1350.

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