EUR/USD Daily Forecast – Test Of Support At 1.1965
EUR/USD Video 05.02.21.
U.S. Dollar Remains Strong Against Euro
EUR/USD managed to settle below 1.2000 and is testing the next support level 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 managed to get above the resistance at 91.50 and is trying to continue its upside move. If the U.S. Dollar Index gets to the test of the next resistance level at 91.75, EUR/USD will find itself under pressure.
Yesterday, EU reported that Euro Area Retail Sales increased by 2% month-over-month in December compared to analyst consensus which called for growth of 1.6%. On a year-over-year basis, Retail Sales grew by 0.6%.
While Euro Area Retail Sales report exceeded expectations, it failed to provide any support to the European currency as foreign exchange market traders focused on the weakness of the European economy and the slow start of the mass vaccination program in the EU.
The relative strength of the U.S. economy and the recent progress on the vaccination front provided significant support to the U.S. dollar. However, it remains to be seen whether the recent trend will be sustainable over the longer term as the Fed’s policy will remain ultra-dovish in the upcoming months.
Technical Analysis
EUR/USD gained strong downside momentum and is currently trying to settle below the support level at 1.1965. If this attempt is successful, EUR/USD will move towards the next support at 1.1925.
In case EUR/USD declines below the support at 1.1925, it will head towards the next support level which is located at 1.1900. A successful test of this level will open the way to the test of the support at 1.1870.
On the upside, the previous support level at 1.2000 will likely serve as the first resistance level for EUR/USD. If EUR/USD manages to settle above this level, it will head towards the next resistance level which is located at 1.2040. A move above 1.2040 will open the way to the test of the resistance at 1.2060.
For a look at all of today’s economic events, check out our economic calendar.