EUR/USD Daily Forecast – U.S. Dollar Is Mostly Flat Against Euro

EUR/USD Video 22.01.21.

Traders Wait For PMI Reports

EUR/USD is currently trying to stay above the support level at 1.2155 while the U.S. dollar is gaining some ground against a broad basket of currencies.

The U.S. Dollar Index failed to settle below the support level at 90 and is slowly moving towards the nearest resistance level at the 20 EMA at 90.30. If the U.S. Dollar Index manages to get to the test of this level, EUR/USD may find itself under some pressure on the foreign exchange market.

Today, traders will have a chance to take a look at flash PMI data for January from U.S. and EU.

U.S. Manufacturing PMI is expected to decline from 57.1 in December to 56.5 in November while U.S. Services PMI is projected to decrease from 54.8 to 53.6. Meanwhile, Euro Area Manufacturing PMI is expected to decline from 55.2 to 54.5 while Euro Area Services PMI is projected to decrease from 46.4 to 44.5.

The reports will show whether the second wave of the virus has put additional pressure on the services segment. UK has recently released Retail Sales report for December which showed that Retail Sales grew by just 0.3% month-over-month compared to analyst consensus which called for growth of 1.2%.

This report may signal that analysts are too optimistic in their forecasts, but it is also possible that the problems are limited to UK, which has to deal with a new strain of coronavirus, while U.S. and EU economies are in a better shape.

Technical Analysis

EUR/USD made an attempt to settle above the resistance at 1.2175 but failed to develop additional upside momentum and pulled back closer to 1.2155. If EUR/USD manages to settle above 1.2175, it will head towards the next resistance level at 1.2220. A successful test of this level will open the way to the test of the resistance at 1.2250.

On the support side, a move below 1.2155 will push EUR/USD towards the next support level at 1.2130. In case EUR/USD declines below the support at 1.2130, it will get to the test of the 50 EMA near 1.2120. A move below the 50 EMA will signal that EUR/USD will try to develop additional downside momentum.

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