EUR/USD Daily Forecast – U.S. Dollar Is Mostly Flat Ahead Of Inflation Data

Euro Lacks Momentum Ahead Of The Weekend

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

The U.S. Dollar Index is testing the resistance level at 96.25. A move above this level will open the way to the test of the resistance at 96.50 which will be bearish for EUR/USD.

The main event of the day for foreign exchange market traders is the release of U.S. inflation data. Analysts expect that Inflation Rate increased by 0.7% month-over-month in November. On a year-over-year basis, Inflation Rate is expected to grow by 6.8%. Core Inflation Rate is projected to increase by 4.9% year-over-year.

Inflation reports will likely have a significant impact on EUR/USD dynamics. In case inflation exceeds analyst expectations, U.S. dollar may get a boost as traders would rush to bet that Fed would start raising rates in the first half of 2022.

Today, traders will also have a chance to take a look at the preliminary Consumer Sentiment report for December. Analysts expect that Consumer Sentiment declined from 67.4 in November to 67.1 in December.

Technical Analysis

EUR/USD declined below 1.1300 and is trying to develop additional downside momentum. In case this attempt is successful, EUR/USD will move towards the support at 1.1270.

A successful test of the support at 1.1270 will push EUR/USD towards the next support at 1.1230. If EUR/USD manages to settle below this level, it will head towards the support at 1.1200.

On the upside, EUR/USD needs to get back above 1.1300 to have a chance to develop upside momentum in the near term. In case EUR/USD manages to settle back above 1.1300, it will move towards the next resistance level which is located at the 20 EMA at 1.1320.

A move above the 20 EMA at 1.1320 will open the way to the test of the resistance at 1.1350. If EUR/USD settles above this resistance level, it will move towards the next resistance at 1.1370.

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