Recovering market sentiment is expected to continue to add ‘wounds’ to US dollar trading this week after showing a dismal performance last week.
With the rise to recent highs for the S&P 500 and Dow Jones indices in the US stock market, indications of a global economic recovery have given investors confidence and made safe-haven currencies including the US dollar depreciate.
Moreover, the US 10-year treasury yield remained moving low below the 1.60% level despite a slight increase over the weekend.
European currencies have managed to capitalize on the opportunity to trade higher last week with the situation of the depreciating US dollar.
On the price chart of the EUR/USD pair, the price has risen at the beginning of last week towards the level of 1.2000.
However, the resistance level still failed to be broken with the price movement towards the end of the week flat below the 1.2000 level.
The opening of trading at the beginning of the week saw the price make a decline in the Asian session below the Moving Average 50 (MA50) barrier level on the 1 hour time frame of the price movement giving an early signal for the start of a bearish trend.
The decline will again test the support level at the price zone of 1.19000 after the price jumped above that level at the beginning of last week.
Still, expectations for the US dollar to remain moving weak could support higher price increases this week. The 1.2000 resistance zone needs to be broken to proceed to the next rise.
If the price manages to break through the zone, a higher rise is likely to be expected towards the focus zone of 1.20600-1.20900 to record the latest 7-week high.
