Euro rises against the US dollar
EUR / USD managed to bounce back above the 20-day EMA at 1.2175, while the US dollar is under some pressure against a broad basket of currencies.
The US Dollar Index is testing the nearest support level, located at 90. A successful test of this level will push the US Dollar Index to support at 89.75, which will be optimistic for EUR / USD.
The European Central Bank left the interest rate unchanged yesterday. There were no surprises in the Bank’s commentary, and the ECB’s interest rate decision had minimal impact on the euro / dollar rate.
Interestingly, the US inflation data did not put pressure on EUR / USD, despite the fact that the US inflation rate rose 5% year-on-year in May, compared to the analyst consensus of 4.7% growth.
Forex traders are now focusing on a preliminary report on consumer sentiment in Michigan for June. Analysts expect consumer sentiment to improve from 82.9 in May to 84 in June as the economy continued to expand.
EUR / USD is now moving towards the resistance level of 1.2200. If EUR / USD manages to gain a foothold above this level, it will head towards the next resistance at 1.2220.
A successful test of the resistance at 1.2220 will open the way to test the next resistance at 1.2250. A move above this level will signal that EUR / USD will try to develop additional growth momentum.
In terms of support, the closest support level for EUR / USD is located at the 20-day moving average at 1.2175. If EUR / USD falls below this level, it will move to the next support at 1.2155.
A successful test of support at 1.2155 will push EUR / USD towards the next support near the 50-day moving average at 1.2130. If EUR / USD manages to consolidate below the 50-day moving average, it will receive additional downside momentum and head towards support at 1.2115.
In terms of the bigger picture, EUR / USD remains stuck in a range between support at 1.2115 and resistance at 1.2250, and more catalysts will be needed to break out of that range.
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