EUR/USD Daily Forecast – U.S. Dollar Is Under Pressure

EUR/USD Video 05.01.21.

Euro Moves Higher Against U.S. Dollar

EUR/USD is currently trying to get to the test of the resistance at 1.2280 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index failed to settle above the resistance at the 90 level and declined towards the support at 89.75. If the U.S. Dollar Index settles below this support level, it will gain downside momentum and head towards the next support level which is located near the recent lows at 89.40 which will be bullish for EUR/USD.

Yesterday, EU reported that Manufacturing PMI increased from 53.8 in November to 55.2 in December. It remains to be seen whether this positive trend will be sustained at the beginning of 2021 due to the continued problems with the virus in Europe which will likely put additional pressure on businesses.

Today, foreign exchange market traders will likely focus on the news from the U.S. as Senate elections in Georgia will determine who will have control of the Senate. If Democrats win, the market will expect additional stimulus in the near term as Democrats would control both the House and the Senate. This is a bearish scenario for the American currency.

Technical Analysis

EUR/USD managed to get above the resistance at 1.2250 and is moving towards the next resistance level at 1.2280. RSI is in the moderate territory, and there is plenty of room to gain additional momentum.

In case EUR/USD settles above the resistance at 1.2280, it will head towards the next resistance level which is located at the recent highs at 1.2310. This resistance level has already been tested several times and proved its strength. If EUR/USD manages to get above this resistance level, it will head towards the next resistance at 1.2325.

On the support side, a move below 1.2250 will push EUR/USD towards the next support level at 1.2220. If EUR/USD declines below this support level, it will head towards the next support which is located at the 20 EMA at 1.2200. A move below the 20 EMA will open the way to the test of the support at 1.2175.

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