EUR/USD Daily Forecast – Euro Pulls Back After Yesterday’s Rally
EUR/USD Video 18.03.21.
U.S. Dollar Gains Ground Against Euro
EUR/USD is currently trying to settle back below the support at 1.1965 while the U.S. dollar is flat against a broad basket of currencies.
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The U.S. Dollar Index failed to settle below the support level at the 20 EMA at 91.35 and rebounded towards the nearest resistance level at 91.50. In case the U.S. Dollar Index gets above 91.50, it will head towards the resistance at 91.75 which will be bearish for EUR/USD.
Yesterday, EU reported that Euro Area Inflation Rate increased by 0.9% year-over-year in February while Euro Area Core Inflation Rate grew by 1.1%. The reports were in line with the analyst consensus and had little impact on EUR/USD as foreign exchange market traders focused on Fed’s commentary.
Fed Chair Jerome Powell stated that the Fed would not raise the interest rate in case inflation gets above the 2% level as it wants to see higher inflation for some time to boost economic recovery. He also added that it was not the time to talk about reducing stimulus to the economy.
Powell’s dovish comments provided support to the U.S. stock market and put some pressure on the U.S. dollar. Meanwhile, Treasury yields continued to move higher as bond traders remained worried about higher inflation. It remains to be seen whether rising yields will be able to provide additional support to the American currency in the upcoming trading sessions.
Technical Analysis
EUR/USD faced resistance at the 20 EMA at 1.1985 and is trying to settle below the support at 1.1965. If this attempt is successful, EUR/USD will head towards the next support at 1.1925.
A move below the support at 1.1925 will open the way to the test of the support at 1.1900. In case EUR/USD settles below 1.1900, it will head towards the next support level which is located at 1.1880.
On the upside, EUR/USD needs to get above the resistance at the 20 EMA at 1.1985 to continue its upside move. The next resistance level is located at 1.2000. If EUR/USD settles above this level, it will head towards the resistance at the 50 EMA at 1.2035.
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