Euro Is Losing Ground Against U.S. Dollar
EUR/USD is currently trying to settle below the support level at 1.0960, while the U.S. dollar is gaining ground against a broad basket of currencies.
The U.S. Dollar Index managed to get above the resistance level at 98.70 and is moving towards the next resistance at 99. A successful test of this level will push the U.S. Dollar Index towards the resistance at 99.20, which will be bearish for EUR/USD.
Today, foreign exchange market traders will take a look at Euro Area Construction Output for January. Analysts expect that Euro Area Construction Output declined by 0.5% year-over-year after falling by 3.9% in December.
Traders will also continue to monitor the developments in U.S. government bond markets as Treasury yields are testing new highs after hawkish comments from Fed Chair Jerome Powell. Higher Treasury yields may serve as the key catalyst for currency markets and provide significant support to the U.S. dollar.
Technical Analysis
EUR/USD is testing the support level at 1.0960. In case this test is successful, EUR/USD will move towards the next support level, which is located at 1.0930. RSI is in the moderate territory, and there is plenty of room to gain additional downside momentum in case the right catalysts emerge.
A move below the support at 1.0930 will open the way to the test of the support at 1.0900. If EUR/USD gets below this level, it will move towards the support at 1.0885.
On the upside, the nearest resistance level for EUR/USD is located at 1.1000. In case EUR/USD climbs back above this level, it will head towards the resistance at 1.1035.
A move above the resistance at 1.1035 will lead to the test of the next resistance at the 20 EMA at 1.1045. If EUR/USD gets above this level, it will move towards the resistance at 1.1060.