Market players are increasingly cautious about the US dollar trade ahead of the FOMC meeting to see the decision on monetary policy by the Federal Reserve (Fed).
Investors are waiting for clearer indications on measures for the Fed to reduce asset purchases (tapering) or will continue to maintain policy easing in support of the economy.
After showing a surge at the end of last week’s trading close, the US dollar rebounded from a 1 -month high and moved slowly again to resume trading earlier this week.
But it is not impossible for the US dollar to resume strengthening as it did last Friday. However, the situation is seen as quite difficult apart from the pressure on the decline in US treasury yields which continued to hover below the 1.50% level despite showing a surge yesterday.
If the price movement on the chart of the EUR/USD currency pair is examined, the price failed to maintain the drastic bearish momentum last Friday when the price failed to break the 1.20900 level tested at the support zone.
Yet the horizontal price movement is still hovering below the Moving Average 50 (MA50) barrier on the 1 -hour time frame on the EUR/USD chart which is still giving a signal for the price to make a decline.
If the price manages to continue the decline below the support zone 1.20900-1.20600, the price will be pushed lower towards the 1.2000 focus level.
Yet if the US dollar continues to depreciate before the FOMC meeting, the price is likely to rise higher to re-hover in the resistance zone 1.21500-1.21800.
Passing that zone will signal for the price to continue higher upside further retesting the 1.22500 resistance zone tested in previous weeks.
Also in focus for the US dollar today was the release of US retail sales data at the start of tonight’s New York session.
