EUR/USD Tests Support At 1.1035

Key Insights

• EUR/USD remains under pressure at the start of the week.
• Recent inflation reports failed to provide any support to the euro as traders remained focused on Europe’s economic problems.
• A move below 1.1035 will push EUR/USD towards the support at 1.1010.

Euro Is Losing Some Ground Against U.S. Dollar

EUR/USD is currently trying to settle below the support level at 1.1035, while the U.S. dollar is moving higher against a broad basket of currencies.

The U.S. Dollar Index settled above 98.60 and is trying to move above the resistance level at 98.70. If this attempt is successful, the U.S. Dollar Index will head towards the 99 level, which will be bearish for EUR/USD.

On Friday, EU reported that Euro Area Inflation Rate increased by 2.5% month-over-month in March, compared to analyst consensus of 1.9%. On a year-over-year basis, Inflation Rate increased by 7.5%, compared to analyst consensus of 6.6%. Core Inflation Rate grew by 3% year-over-year.

The inflation data did not provide any support to the European currency as the markets are worried about the long-term impact of sanctions on Russia on the European economy. According to recent reports, EU may impose new sanctions on Russia this week, which may serve as an additional bearish catalyst for the euro.

Technical Analysis

EUR/USD is testing the support level at 1.1035. If EUR/USD settles below this level, it will head towards the next support level at 1.1010.

A successful test of the support at 1.1010 will open the way to the test of the support at 1.0990. In case EUR/USD manages to settle below the support at 1.0990, it will continue its downside move and head towards the support at 1.0970.

On the upside, the previous support level at 1.1050 will serve as the first resistance level for EUR/USD. If EUR/USD manages to settle back above this level, it will head towards the next resistance at 1.1075. A move above the resistance at 1.1075 will push EUR/USD towards the resistance at 1.1100.

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