EUR/USD Is Under Pressure At The Start Of The Week

Euro Is Losing Ground Against U.S. Dollar

EUR/USD continues its attempts to settle below the 50 EMA at 1.1350 while U.S. dollar is trying to gain more ground against a broad basket of currencies.

The U.S. Dollar Index moved back above the 96 level and is heading towards the next resistance level which is located at 96.25. In case the U.S. Dollar Index manages to settle above this level, it will head towards the resistance at 96.50 which will be bearish for EUR/USD.

Today, foreign exchange market traders will likely focus on the ECB President Lagarde speech. Lagarde may offer additional comments on ECB’s plans to fight inflation, which may have an impact on EUR/USD dynamics.

Traders will also continue to monitor the developments in U.S. government bond markets as Treasury yields have started to move higher after the pullback which was triggered by tensions over Ukraine. However, markets calmed a bit today, and traders focused on high inflation. In case Treasury yields move closer to recent highs, U.S. dollar will get more support.

Technical Analysis

EUR/USD is testing the support level at the 50 EMA at 1.1350. In case this test is successful, EUR/USD will get to the test of the next support which is located at 1.1330.

A move below the support level at 1.1330 will open the way to the test of the next support level at 1.1300. If EUR/USD settles back below this level, it will continue its pullback and head towards the support at 1.1270.

On the upside, EUR/USD needs to settle back above the 50 EMA to have a chance to develop upside momentum in the near term. The next resistance level for EUR/USD is located at 1.1370.

In case EUR/USD manages to settle above the resistance at 1.1370, it will move towards the resistance level at 1.1390. A successful test of this level will open the way to the test of the resistance at 1.1420.

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