EUR/USD Daily Forecast – Test Of Resistance At 1.2325

EUR/USD Video 06.01.21.

Euro Gains Ground Against U.S. Dollar

EUR/USD is currently trying to settle above the resistance at 1.2325 while the U.S. dollar is losing ground against a broad basket of currencies.

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The U.S. Dollar Index has managed to get below the nearest support level at 89.40 and is moving lower. The next material support level for the U.S. Dollar Index is located at 89.

It looks like Democrats will win both seats in the runoff elections in Georgia and take control of the Senate which is bearish for the U.S. dollar as they will likely introduce an additional stimulus package. If the U.S. Dollar Index gets to the test of the support level at 89, EUR/USD will get additional support.

Today, EU will provide the final reading of the Euro Area Services PMI report for December. Analysts expect that Euro Area Services PMI will increase from 41.7 in November to 47.3 in December.

It remains to be seen whether this increase will be sustainable given the current situation with coronavirus in Europe. At the same time, foreign exchange market traders may stay focused on the U.S. Senate elections rather than on the economic data from EU which will be bullish for EUR/USD.

[fx-article-ad]Technical Analysis

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EUR/USD is currently testing the nearest resistance level at 1.2325. RSI is close to the overbought territory but there is plenty of room to gain additional momentum.

If EUR/USD manages to settle above the resistance at 1.2325, it will head towards the next resistance level at 1.2350. A move above 1.2350 will open the way to the test of the resistance at 1.2400. It should be noted that EUR/USD has not visited this territory for several years so it remains to be seen whether previous levels will be relevant for todays trading.

On the support side, the previous resistance at 1.2310 will likely serve as the first support level for EUR/USD. In case EUR/USD declines below this level, it will head towards the next support at 1.2280. A move below the support at 1.2280 will push EUR/USD towards the support at 1.2250.

For a look at all of todays economic events, check out our economic calendar.