EUR/USD Pulls Back After Yesterday’s Rally

Key Insights

• Traders take some profits off the table after the strong move. 
• Today, the market will focus on ECB Interest Rate Decision and commentary.
• U.S. inflation data will also have a material impact on EUR/USD dynamics. 

Euro Is Losing Some Ground Against U.S. Dollar

EUR/USD is currently trying to settle below the support at 1.1060, while the U.S. dollar is moving higher against a broad basket of currencies.

The U.S. Dollar Index is stuck near the resistance level at 98. In case the U.S. Dollar Index settles above 98, it will move towards the next resistance at 98.35, which will be bearish for EUR/USD.

Today, foreign exchange market traders will focus on the ECB Interest Rate Decision. The rate is expected to stay unchanged, and traders will pay attention to ECB commentary. Most likely, ECB will try to calm markets and promise more support due to the recent volatility in commodity markets.

In the U.S., traders will focus on the inflation reports for February. Inflation Rate is expected to increase by 7.9% year-over-year, while Core Inflation Rate is expected to grow by 6.4%. These reports will also have a material impact on EUR/USD dynamics.

Technical Analysis

EUR/USD is currently testing the support level at 1.1060. If this test is successful, EUR/USD will move towards the next support level, which is located at 1.1035.

A move below the support at 1.1035 will open the way to the test of the support at 1.1000. In case EUR/USD declines below this level, it will head towards the next support level, which is located at 1.0960.

On the upside, the nearest resistance level for EUR/USD is located near the recent highs at 1.1100. If EUR/USD climbs above this level, it will head towards the next resistance at the 20 EMA at 1.1120. A successful test of the resistance at the 20 EMA will push EUR/USD towards the resistance at 1.1145.

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