EUR/USD tests resistance at 1.1365

The euro gains against the US dollar

The EUR/USD is currently trying to establish itself above the resistance of the 50 EMA at 1.1365 while the US Dollar is under pressure against a large basket of currencies.

The US Dollar Index recently managed to break below the 50 EMA at 95.55 and is heading towards the support level at 95.40. In the event that the US Dollar Index drops below this level, EUR/USD will receive more support.

Today, FX traders will focus on the final reading of EU inflation reports. Analysts expect the eurozone inflation rate to rise 0.4% month-on-month in December. On an annual basis, the inflation rate is expected to increase by 5%. The underlying inflation rate should increase by 2.6%.

Typically, final readings display the same data as preliminary readings, but traders should keep in mind that any surprises will have a significant impact on the momentum of EUR/USD.

I also note that the German 10-year government bond yield continues its attempts to settle above the 0.00% level. Yields have been negative since early 2019, and a return to positive territory could provide further support for the European currency.

EUR/USD is testing the resistance of the 50 EMA at 1.1365. If 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 resistance at 1.1425. If EUR/USD breaks above this level, it will head towards the next resistance level at 1.1450.

On the support side, the closest support level for EUR/USD is at 1.1330. If the EUR/USD manages to get back below this level, it will head towards the next support at 1.1300. A successful test of this support level will pave the way for a test of the next support at the January lows at 1.1270.

For an overview of all of today’s economic events, check out our economic calendar.

About Rodney Fletcher

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