EUR/USD Daily Forecast – Euro Remains Under Pressure Against U.S. Dollar
EUR/USD Video 28.01.21.
U.S. Dollar Gains Ground Against Euro
EUR/USD is currently trying to settle below the support level at 1.2080 while the U.S. dollar is gaining ground against a broad basket of currencies.
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The U.S. Dollar Index is trying to get above the resistance level at the 50 EMA at 90.80. A move above this level will push the U.S. Dollar Index towards the next resistance level at 91.10 which will be bearish for EUR/USD.
Yesterday, Germany reported that the country’s Business Confidence declined from 92.2 in December to 90.1 in January. The sudden decline of Business Confidence put significant pressure on the euro.
Today, foreign exchange market traders will take a look at Euro Area Consumer Confidence report for January. Consumer Confidence is projected to decline from -13.9 in December to -15.5 in January due to the negative impact of the second wave of the virus in Europe.
If the upcoming economic reports from the EU continue to show that the European economy is under strong pressure from the pandemic, euro may gain additional downside momentum.
Technical Analysis
EUR/USD is testing the nearest support level at 1.2080. If this test is successful, EUR/USD will move towards the next support level which is located near January lows at 1.2060. RSI is still in the moderate territory, and there is plenty of room to gain downside momentum in case the right catalysts emerge.
In case EUR/USD declines below the support at 1.2060, it will head towards the next support level at 1.2040. A move below the support at 1.2040 will push EUR/USD towards the psychologically important support level at 1.2000. There are no important levels between 1.2040 and 1.2000 so this move may be fast.
On the upside, the nearest resistance level for EUR/USD is located at the 50 EMA at 1.2120. If EUR/USD gets above the 50 EMA, it will get to the test of the next resistance at 1.2130. A move above the resistance at 1.2130 will push EUR/USD towards the next resistance level at the 20 EMA at 1.2150.
For a look at all of today’s economic events, check out our economic calendar.