Has market sentiment changed?
Shocking investors on Tuesday's trading when the US dollar, which had been weakening over the past week and resumed earlier this week, began showing more significant rebuilding at the New York session yesterday.
This is due to the surge in US bond yields driven by the prospect of economic recovery and the potential for an increase in inflation.
The US dollar index bounced back from a 3-week low and the king of the currency managed to regain trading against other major currencies in the market.
If you look at the price movement on the chart of the major currency pair EUR / USD yesterday, the price managed to continue rising to a 3-week high when it reached the resistance zone 1.21500-1.21800 in the European session.
The increase was supported by European economic sentiment with positive published figure readings.
However, the New York session saw a resurgence of the US dollar and lower prices from the resistance zone.
A drop below the Moving Average 50 (MA50) barrier level over the 1-hour time frame keeps investors alert to the probability of a price trend change.
Continuing the Asian session trading on Wednesday, the price continued to decline to the RBS zone (resistance become support) 1.20900-1.20550.
The zone will be tested to support the price increase to continue the uptrend last week.
The price hike will again test the resistance zone reached yesterday with the expectation of continuing the rise to the latest monthly high to 1.22500.
On the other hand, if the price continues to fall lower, the price is seen to be heading to the focus level of 1.2000 before the next decline to the support level of 1.19500.
Investors will be paying attention to US retail sales data to be released at the New York session tonight and will influence the movement of the US dollar.
