EUR/USD Daily Forecast – A Move Below The 20 EMA Threatens Upside Momentum

Euro Continues To Lose Ground Against The U.S. Dollar

EUR/USD is trying to settle below 1.1800 as the U.S. Dollar Index makes an attempt to get above the 20 EMA at 93.

This week, the U.S. Dollar Index has found support at 91.75 and quickly rebounded to 93. The main drivers for this rebound were the encouraging U.S. Manufacturing PMI data and hopes for the new stimulus package.

If the U.S. Dollar Index settles above the 93 level, it will likely gain more momentum which would be bearish for EUR/USD.

Today, traders will focus on Services PMI and Retail Sales data for Euro Area. Services PMI is expected to decrease from 54.7 in July to 50.1 in August as the continued spread of coronavirus in EU put pressure on the services sector.

Meanwhile, Retail Sales are projected to grow by 1.5% on a month-over-month basis in July. On a year-over-year basis, Retail Sales are expected to increase by 3.5%.

In the U.S., the services segment is expected to continue its rebound, and the U.S. Services PMI is expected to grow from 50 in July to 54.8 in August.

Technical Analysis

EUR/USD declined below the 20 EMA at 1.1840 and gained more downside momentum. The nearest support for EUR/USD is located at the recent lows at 1.1765.

In case EUR/USD manages to settle below the support at 1.1765, it will continue its downside move and head towards the next support at the 50 EMA at 1.1705.

On the upside, the previous support at the 20 EMA will likely serve as the first resistance level for EUR/USD. If EUR/USD manages to get above the 20 EMA, it will head towards the next resistance level at 1.1910.

At this point, the near-term upside momentum of EUR/USD is under a big threat since EUR/USD moved below the 20 EMA. In order to quickly return to the previous upside mode, EUR/USD will need to get back above the 20 EMA.

If EUR/USD fails to get above the 20 EMA in the next few trading sessions, it will have serious chances to develop material downside momentum. #EUR/USD##FX#

Reprinted from FXEmpire，the copyright all reserved by the original author.