EUR/USD is testing the nearest resistance level at 1.2130.
Euro Gains Some Ground Against U.S. Dollar
EUR/USD is currently trying to get back above the resistance at 1.2130 while the U.S. dollar is losing ground against a broad basket of currencies.
The U.S. Dollar Index declined below the support at the 20 EMA at 90.35 and is slowly moving towards the 90 level. If the U.S. Dollar Index gets to the test of this level, EUR/USD will get additional support.
Yesterday, EU reported that Euro Area Inflation Rate decreased by 0.3% year-over-year in December while Core Inflation Rate grew by 0.2%. Both reports were in line with analyst expectations.
Prices remain weak in the Euro Area due to the negative impact of the strong second wave of coronavirus. It looks like Europe’s significant problems on the virus front put some pressure on the euro in recent weeks.
Today, foreign exchange market traders will focus on the European Central Bank Interest Rate Decision and the subsequent commentary. The rate is expected to stay unchanged, and traders will pay attention to ECB evaluation of the current economic situation.
Yesterday, EUR/USD made an attempt to settle above the resistance at 1.2155 but failed to develop sufficient upside momentum and pulled back. However, EUR/USD received strong support near 1.2080 and is trying to settle back above the resistance at 1.2130.
If this attempt is successful, EUR/USD will get to another test of the next resistance level which is located at the 20 EMA at 1.2155. A move above this level will open the way to the test of the resistance at 1.2175. In case EUR/USD settles above 1.2175, it will head towards the next resistance at 1.2220.
On the support side, the nearest material support level for EUR/USD is located at the 50 EMA at 1.2115. If EUR/USD manages to settle below this level, it will head towards the next support at 1.2080. A successful test of this level will push EUR/USD towards the next support level which is located at 1.2060.