EUR/USD Daily Forecast – U.S. Dollar Pulls Back After Strong Move

Euro Moves Higher Against U.S. Dollar

EUR/USD is currently trying to settle back above 1.1720 while the U.S. dollar is moving lower against a broad basket of currencies.

The U.S. Dollar Index did not manage to settle above the resistance at 93.10 and pulled back closer to the 93 level. In case the U.S. Dollar Index declines below the 93 level, it will head towards the support at 92.80 which will be bullish for EUR/USD.

Today, foreign exchange market traders will have a chance to take a look at the final reading of inflation reports from EU. Analysts expect that Inflation Rate declined by 0.1% month-over-month in July after growing by 0.3% in June. On a year-over-year basis, Inflation Rate is projected to grow by 2.2%. Core Inflation Rate is projected to increase by 0.7%. Typically, final inflation numbers do not contain major corrections, and it remains to be seen whether these reports will have an impact on EUR/USD trading dynamics.

In the U.S., traders will focus on housing market data. Building Permits are expected to increase by 1% month-over-month in July while Housing Starts are projected to decline by 2.6%.

Technical Analysis

EUR/USD failed to get to the test of the support level at 1.1690 and is trying to move back above 1.1720. In case this attempt is successful, EUR/USD will head towards the resistance at 1.1750.

A move above this level will push EUR/USD towards the next resistance level which is located near the 20 EMA at 1.1775. If EUR/USD gets above the 20 EMA, it will move towards the resistance at 1.1800.

On the support side, the nearest support level for EUR/USD is located at 1.1690. RSI is in the moderate territory, and there is plenty of room to develop downside momentum in case the right catalysts emerge.

In case EUR/USD declines below 1.1690, it will head towards the next support level at 1.1660. A successful test of the support at 1.1660 will push EUR/USD towards the support at 1.1625.

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