EUR/USD Daily Forecast – U.S. Dollar Is Losing Some Ground Against Euro

Euro Moves Higher Against U.S. Dollar

EUR/USD has managed to get back above 1.1720 while the U.S. dollar remained flat against a broad basket of currencies.

The U.S. Dollar Index has recently made an attempt to settle below the support at 93.10 but failed to develop sufficient downside momentum and rebounded towards 93.20. The nearest resistance level for the U.S. Dollar Index is located at 93.40. In case the U.S. Dollar Index manages to settle above this level, it will head towards the resistance at 93.75 which will be bearish for EUR/USD.

It’s a quiet day on the economic calendar, so foreign exchange market traders will try to prepare for the Fed Interest Rate Decision which will be released on September 22.

The key question is whether Fed Chair Jerome Powell is ready to announce the reduction of Fed’s asset purchase program. Powell has been consistently dovish during the pandemic, and it looks that he will use any opportunity to delay tapering.

Recent economic data was inconclusive while global markets found themselves under pressure on fears about the potential default of China’s developer Evergrande. In this environment, Powell will likely keep the current policies intact, but any surprises will cause significant volatility.

Technical Analysis

EUR/USD has recently made an attempt to settle below the support at 1.1720 but failed to develop sufficient downside momentum. The nearest resistance level for EUR/USD is located at 1.1750.

In case EUR/USD manages to get back above 1.1750, it will head towards the next resistance level which is located near the 20 EMA at 1.1775. A successful test of this level will push EUR/USD towards the resistance at 1.1800.

On the support side, a move below 1.1720 will open the way to the test of the support at 1.1690. If EUR/USD declines below this level, it will move towards the support at 1.1660. A successful test of the support at 1.1660 will push EUR/USD towards the next support which is located at 1.1630.

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