True to market analysts' expectations for the movement of the US dollar earlier in the week, the king of the currency remained weak to close trading for May with losses recorded for 2 consecutive months.
Investors are also cautious and controlling for trading risk this week ahead of the US NFP employment data report to be published on Friday.
Apparently, the initial strengthening momentum exhibited by the U.S. dollar last weekend after the strongest published PCE spending index data since 1992, failed to be sustained.
As usual, the situation of the depreciation of the US dollar continues to leave room for other major currencies in the market to rebound.
Interesting to observe the price movement on the chart of the EUR/USD currency pair.
The bearish pattern displayed last week changed again after there was a signal of a reversal of the trend for the price to resume the previous bullish trend.
After the price tested the highs around 1.22600 last week, a bearish pattern was exhibited before the price tested the RBS (resistance become support) zone of 1.21800-1.21500 at the end of the week.
However, after the resumption of the price above the zone, the price moved above the support level of Moving Average 50 (MA50) on the 1 -hour time frame of yesterday's price movement for a bullish signal.
Until the resumption of the Asian session this morning (Tuesday), the price is seen heading back to the resistance zone of 1.22500 and is likely to surpass the price level reached last week.
For higher gains, the targeted price level is at around 1.23000 to record the latest high since January.
Yet investors are wary of the US dollar’s strengthening situation while awaiting Federal Reserve (Fed) action in policy settings after PCE data that could re -trigger the US dollar’s surge.
If a price fall occurs, the RBS zone 1.21800-1.21500 will remain the key zone where the price will be tested to re-support the price making a rise as in previous weeks.
On the other hand if the price continues to make lower declines, the price is expected to head to the next RBS zone at 1.20900-1.20600 and may reach up to the support level of 1.20000 if the US dollar continues to dominate again.
