EUR/USD Daily Forecast – U.S. Dollar Tries To Gain More Ground Against Euro

EUR/USD Video 12.05.21.

Euro Is Under Some Pressure Against U.S. Dollar

EUR/USD is testing the support level at 1.2130 while the U.S. dollar is moving higher against a broad basket of currencies.

The U.S. Dollar Index is currently trying to get above the resistance at 90.30. In case this attempt is successful, the U.S. Dollar Index will move towards the next resistance at 90.50 which will be bearish for EUR/USD.

Today, EU will release Industrial Production data for March. Analysts expect that Industrial Production increased by 0.7% month-over-month in March after declining by 1% in February. On a year-over-year basis, Industrial Production is projected to grow by 11.6% as it was under significant pressure in March 2020.

Foreign exchange market traders will also have a chance to take a look at inflation data from the U.S. which is the main economic event of the day. Analysts expect that Inflation Rate increased by 0.2% month-over-month in April. On a year-over-year basis, Inflation Rate is projected to grow by 3.6%. Core Inflation Rate is expected to increase by 2.3% year-over-year.

The key question is whether inflation will rise faster than expected. The Fed has previously stated that it was not worried about higher inflation in the near term, but Fed may be forced to act in case the situation starts to get out of control.

Technical Analysis

EUR/USD is currently trying to settle below the support at 1.2130. In case this attempt is successful, EUR/USD will move towards the next support which is located at 1.2115.

A move below the support at 1.2115 will push EUR/USD towards the support at 1.2090. If EUR/USD declines below this level, it will head towards the next support at the 20 EMA at 1.2075.  A successful test of this level will open the way to the test of the support at 1.2060.

On the upside, the nearest resistance level for EUR/USD is located at 1.2155. A move above 1.2155 will push EUR/USD towards the resistance at 1.2175. If EUR/USD manages to settle above this level, it will head towards the next resistance at 1.2220.

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