The Euro has rallied slightly to kick off the trading session on Wednesday but gave back the gains to show signs of weakness again. All things being equal, I think that the market is going to go looking towards the support level at the 1.16 level, which is a major support level. Below there, then we have significant support reaching down to the 1.15 handle and breaking below that would send this market another 300 points lower.
EUR/USD Daily Forecast – Test Of Support At 1.1720
EUR/USD settled below the support at 1.1750 and is trying to get below the next support at 1.1720.
Fundamental - U.S. Dollar Is Mostly Flat Against Euro
The U.S. Dollar Index has recently made an attempt to settle above the resistance at 93.40 but failed to develop sufficient upside momentum and pulled back closer to the support at 93.20. In case the U.S. Dollar Index declines below this level, it will head towards the 93 level which will be bullish for EUR/USD.
Yesterday, EU reported that Euro Area Industrial Sentiment improved from -3.1 in February to 2 in March while Services Sentiment grew from -17 to -9.3. Both reports exceeded analyst expectations. The reports failed to provide support to euro as foreign exchange market traders remained focused on rising Treasury yields and continued problems on the coronavirus front in Europe.
Today, traders will have a chance to take a look at the latest inflation data from Europe. Analysts expect that Euro Area Inflation Rate increased by 0.8% month-over-month in March. On a year-over-year basis, Euro Area Inflation Rate is projected to grow by 1.3%. Euro Area Core Inflation Rate is expected to increase by 1.1%.
Technical Analysis EUR/USD settled below the support at 1.1750 and is testing the next support level at 1.1720. In case this test if successful, EUR/USD will head towards the next support level which is located at 1.1690.
A move below the support at 1.1690 will open the way to the test of the next support at 1.1660.
On the upside, the previous support level at 1.1750 will serve as the first resistance level for EUR/USD. The next resistance level has emerged at 1.1775. This resistance level has been tested during yesterday’s trading session and proved its strength.
In case EUR/USD manages to settle above the resistance at 1.1775, it will head towards the next resistance at 1.1800. A successful test of the resistance at 1.1800 will open the way to the test of the resistance at 1.1830.