Video EUR / USD 21.12.20.
Euro drops against the US dollar at the start of the week
EUR / USD is attempting to move below 1.2175 as the US Dollar gains ground against a large basket of currencies.
The US dollar index has gained momentum amid concerns over the new strain of COVID-19 in Britain. Many European countries have already closed their borders to British travelers, which has boosted demand for the safe haven US dollar in the foreign exchange market.
As a result, the US dollar index attempts to break through resistance at 90.50. A move above this level will push the US dollar index towards the next resistance level at 20 EMA at 91 which will be bearish for EUR / USD.
Today the EU will publish a flash report on consumer confidence for the euro area. Analysts expect consumer confidence to drop from -17.6 to -16.8 in December, but remain under significant pressure from the second wave of the virus. The latest developments in Britain will likely put more pressure on eurozone consumer confidence in the coming weeks.
Technical analysis
EUR / USD is currently trying to break below the major support level at 1.2175. In the event that EUR / USD manages to settle below support at 1.2175, it will move to the next support level at 1.2155.
The RSI is in moderate territory, so there is plenty of room to gain additional bearish momentum in case the right catalysts emerge.
If EUR / USD drops below support at 1.2155, it will head to the support level at 20 EMA at 1.2125. A successful test of this level will pave the way for testing the support at 1.2110.
On the upside, EUR / USD needs to rise above 1.2200 for any chance of gaining ground. The next resistance level for EUR / USD is located at 1.2220. If EUR / USD moves above this level, it will gain momentum on the upside and head towards the next resistance at 1.2250. A move above this level will push EUR / USD towards the resistance level which is just above the recent highs at 1.2280.
For an overview of all of today’s economic events, check out our economic calendar.
This article originally appeared on FX Empire
