EUR/USD Moves Higher Ahead Of Inflation Data

Euro Gains More Ground Against U.S. Dollar

EUR/USD is currently trying to settle above the 20 EMA at 1.1280 while U.S. dollar is under pressure against a broad basket of currencies.

The U.S. Dollar Index has recently managed to get below the support at 96.25 and is trying to develop additional downside momentum. In case this attempt is successful, the U.S. Dollar Index will move towards the 96 level which will be bullish for EUR/USD.

Today, foreign exchange market traders will focus on the flash readings of inflation reports from EU. Analysts expect that Euro Area Inflation Rate declined by 0.3% month-over-month in January due to the fast spread of Omicron. On a year-over-year basis, Euro Area Inflation Rate is projected to grow by 4.4%. Euro Area Core Inflation Rate is expected to increase by 1.9% year-over-year.

In the U.S., traders will have a chance to take a look at ADP Employment Change report which is expected to show that private businesses added 207,000 jobs in January.

Today’s reports may have a material impact on currency dynamics so traders should be prepared for fast moves.

Technical Analysis

EUR/USD is testing the resistance level at the 20 EMA at 1.1280. In case this test is successful, EUR/USD will head towards the next resistance at 1.1300.

A move above the resistance at 1.1300 will open the way to the test of the resistance which is located at the 50 EMA at 1.1325. If EUR/USD gets above this level, it will move towards the next resistance level at 1.1350.

On the support side, EUR/USD needs to get back below the 20 EMA to have a chance to develop downside momentum in the near term. The previous resistance at 1.1270 will serve as the first significant support level for EUR/USD.

In case EUR/USD moves back below 1.1270, it will head towards the support level at 1.1230. A successful test of this support level will push EUR/USD towards the support at 1.1200.

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