EUR/USD Tests Support At 1.0850

Key Insights

• EUR/USD remains under pressure ahead of the weekend as traders are worried about the situation in the European economy.
• Rising Treasury yields have already pushed the U.S. dollar to yearly highs against a broad basket of currencies. 
• A successful test of the support at 1.0850 will push EUR/USD towards the next support level at 1.0810.

Euro Continues To Lose Ground Against U.S. Dollar

EUR/USD is currently trying to settle below the support level at 1.0850, while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index is testing the resistance level at 100. In case this test is successful, the U.S. Dollar Index will move towards the next resistance level at 100.30, which will be bearish for EUR/USD.

Yesterday, EU reported that Euro Area Retail Sales increased by 0.3% month-over-month in February, compared to analyst consensus of 0.6%. On a year-over-year basis, Euro Area Retail Sales grew by 5%.

The market remains worried about the negative impact of high energy prices and sanctions on Russia on the European economy, and the euro is under strong pressure. Meanwhile, the yield of 10-year Treasuries moved to new highs, which was bullish for the U.S. dollar.

Technical Analysis

EUR/USD is testing the support level at 1.0850. In case this test is successful, EUR/USD will move towards the next support level, which is located at 1.0810.

A move below the support at 1.0810 will open the way to the test of the support at 1.0780. In case EUR/USD manages to settle below this level, it will head towards the next support level at 1.0760.

On the upside, the previous support level at 1.0865 will serve as the first resistance level for EUR/USD. In case EUR/USD manages to settle back above this level, it will head towards the next resistance, which is located at 1.0885. A successful test of the resistance at 1.0885 will open the way to the test of the next resistance at 1.0900.

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