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Euro Moves Higher Against U.S. Dollar
EUR/USD is currently trying to settle above the resistance at the 50 EMA at 1.1365 while U.S. dollar is under pressure against a broad basket of currencies.
The U.S. Dollar Index has recently managed to get below the 50 EMA at 95.55 and is moving towards the support level at 95.40. In case the U.S. Dollar Index declines below this level, EUR/USD will get more support.
Today, foreign exchange market traders will focus on the final reading of inflation reports from EU. Analysts expect that Euro Area Inflation Rate increased by 0.4% month-over-month in December. On a year-over-year basis, Inflation Rate is projected to grow by 5%. Core Inflation Rate is expected to increase by 2.6%.
Typically, final readings show the same data as preliminary readings, but traders should keep in mind that any surprise would have a significant impact on EUR/USD dynamics.
I’d also note that the yield of the 10-year German government bonds continues its attempts to settle above the 0.00% level. Yields have been negative since early 2019, and a move back into the positive territory may provide additional support to the European currency.
Technical Analysis
EUR/USD is testing the resistance at the 50 EMA at 1.1365. In case this test is successful, EUR/USD will move towards the next resistance level which is located at 1.1400.
A move above 1.1400 will push EUR/USD towards the resistance at 1.1425. If EUR/USD gets above this level, it will head towards the next resistance level at 1.1450.
On the support side, the nearest support level for EUR/USD is located at 1.1330. If EUR/USD manages to settle back below this level, it will head towards the next support at 1.1300. A successful test of this support level will open the way to the test of the next support which is located at January lows at 1.1270.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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