EUR/USD Tests Resistance At 1.0550

Key Insights

• Euro gains ground after major sell-off. 
• Traders will focus on the flash readings of inflation reports from the EU. 
• A successful test of the resistance at 1.0550 will push EUR/USD towards the next resistance level at 1.0580.

Euro Rebounds Against U.S. Dollar

EUR/USD is currently trying to settle above the resistance at 1.0550, while the U.S. dollar is under pressure against a broad basket of currencies.

The U.S. Dollar Index managed to settle below the support level at 103.25 and is trying to settle below the next support at the 103 level. In case this attempt is successful, the U.S. Dollar Index will head towards the support level at 102.75, which will be bullish for EUR/USD.

Today, foreign exchange market traders will focus on the inflation data from the EU. Analysts expect that Euro Area Inflation Rate increased by 0.5% month-over-month in April. On a year-over-year basis, Euro Area Inflation Rate is projected to grow by 7.5%. Euro Area Core Inflation Rate is expected to increase by 3.2%.

Traders will also take a look at the flash reading of the first-quarter Euro Area GDP Growth Rate report. The report is expected to show that GDP increased by 0.3% on a quarter-over-quarter basis.

Technical Analysis

EUR/USD is testing the resistance level at 1.0550. In case EUR/USD manages to settle above this level, it will head towards the next resistance at 1.0580.

A successful test of the resistance at 1.0580 will open the way to the test of the resistance at 1.0600. If EUR/USD climbs above this level, it will move towards the resistance at 1.0635.

On the support side, the previous resistance at 1.0525 will serve as the first support level for EUR/USD. In case EUR/USD declines below the support at 1.0525, it will head towards the next support level, which is located at 1.0500. A successful test of this level will push EUR/USD towards the support at 1.0485.

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