EUR/USD failed to settle above the resistance at 1.2060 and is testing the support at the 20 EMA.
U.S. Dollar Gains Ground Against Euro
EUR/USD is currently testing the support at the 20 EMA at 1.2025 while the U.S. dollar is moving higher against a broad basket of currencies.
The U.S. Dollar Index has settled back above the 91 level and is testing the resistance at the 20 EMA at 91.30. In case this test is successful, the U.S. Dollar Index will gain additional upside momentum and head towards the resistance at 91.50 which will be bearish for EUR/USD.
Yesterday, EU reported that Euro Area Manufacturing PMI increased from 62.5 in March to 62.9 in April compared to analyst consensus of 63.3. U.S. Manufacturing PMI report was also a bit worse than expected as U.S. Manufacturing PMI increased from 59.1 to 60.5 compared to analyst consensus of 60.6. While the reports did not meet analyst expectations, they highlighted the strength of the rebound in the manufacturing segment.
There are no important economic reports scheduled to be released in the EU today so foreign exchange market traders will focus on the dynamics of U.S. government bond markets. Treasury yields have started to rebound after yesterday’s pullback, and the continuation of this rebound may provide additional support to the American currency.
EUR/USD faced strong resistance at 1.2060 and pulled back. Currently, EUR/USD is trying to settle below the 20 EMA at 1.2025. If this attempt is successful, EUR/USD will move towards the support at 1.1990.
A successful test of the support at 1.1990 will open the way to the test of the next support level at 1.1965. In case EUR/USD declines below the support at 1.1965, it will head towards the next support at 1.1925.
On the upside, EUR/USD needs to settle back above the 20 EMA to have a chance to develop upside momentum in the near term. The next resistance level is located at 1.2040.
If EUR/USD settles above the resistance at 1.2040, it will head towards the resistance at 1.2060. A move above this level will open the way to the test of the resistance at 1.2090.