After falling to a 2-week low, the performance of the US dollar is expected to continue to decline after the US inflation data released at the New York session yesterday was less than encouraging.
The US inflation rate for January was slightly lower than the previous reading while the core inflation reading also declined.
This will continue to drive the continued depreciation of the US dollar since the beginning of next week, in addition to a speech by Federal Reserve (Fed) Chairman Jerome Powell in a dovish tone on the central bank's monetary policy.
The depreciation of the US dollar has given room for the Euro to strengthen to its high level in January after displaying a 4 day consecutive rise on the EUR / USD currency pair chart.
As of yesterday's New York session, the price had risen to a high of 1.21400 after last Friday's price spike surpassed the 1.20000 level.
Despite reaching the latest highs, the price movement was seen to be quite flat on the EUR / USD chart yesterday until continuing with this morning's Asian session trading.
The Moving Average 50 (MA50) support level on the 1 hour time frame will be tested before the expectation for the price to continue rising higher.
Next, the resistance zone below the level of 1.21800 is seen as a place for the price to hover before closing this week's trading.
If the price falls again, the price support level is seen at 1.21900 for the price to re-test the RBS zone (resistance become support) around it.
A lower downtrend with a bearish price trend signal will push the downtrend to reach the 1.20000 level again.
