The strengthening pattern of the US dollar displayed over the weekend failed to be sustained after the US dollar returned to a weak move following the US NFP jobs report published mixed last Friday.
Early trading this week also saw a decline in 10-year US treasury yields which fell back below the 1.60%level.
The focus shifts to US inflation data to be published this week. Expectations for inflation to drop to a 6 -week low will add to the pressure on the US dollar.
On the price chart for the major currency pair EUR/USD, the price is seen continuing higher gains after last Friday’s price surge in reaction to the NFP report.
However, price increases are likely to be limited as investors are also wary of the movement of the Euro currency this week awaiting the outcome of the European central bank's monetary policy meeting.
The displayed price increase has passed the RBS (resistance become support) zone of 1.21800-1.21500 reaching a high level around 1.22000 in yesterday's trading.
The price also moved back above the support level of the Moving Average 50 (MA50) on the 1 -hour time frame on the EUR/USD chart giving a signal for the price to resume the bullish trend.
With the pattern exhibited will expect the price increase to continue towards the resistance zone at 1.22500.
Reaching back to that level saw the resistance zone tested for the third week in a row. 2 weeks ago, the zone still failed to penetrate prices.
Higher price increases beyond the zone are expected to lead to the focus level at the height of 1.23000.
For the bearish situation, it will re-test the RBS zone 1.21800-1.21500 before the lower decline will lead to the support zone at 1.20900-1.20600 overcoming the low reached last week.
