Investors remained vigilant in early trading of the week to digest market sentiment which was still mixed with the development of the Covid-19 contagion continuing to be monitored.
Due to the volatile market environment, the US dollar was seen failing to show a clear direction of price movement after the strengthening in the European session yesterday failed to be sustained before depreciating again in the New York session.
Following expectations for the Federal Reserve (Fed) to implement a reduction in bond purchases (tapering) earlier, US inflation data to be published today as well as Fed Chairman Jerome Powell's speech on Wednesday will be the focus of market attention.
On the price chart of the EUR/USD pair yesterday, it can be seen that the price made a decline of around 40 pips in the European session to the level of 1.18400.
However, the beginning of the New York market session has seen a rebound above the support level of the Moving Average 50 (MA50) on the 1 hour time frame which is still signaling for an uptrend.
Analysts also saw potential for an appreciation of the Euro after there were reports that the European central bank (ECB) would start tapering at its September meeting following a change in inflation target last week.
The price increase is seen to test the resistance of 1.19000 in the SBR zone (support become resistance) like the situation last week.
A successful rise past the zone will strengthen investor confidence for the bullish price trend on the EUR/USD chart with a higher price target at the 1.20000 zone.
On the other hand, if the price declines again, the support zone at 1.18000 remains the price focus level.
The lower decline will record the latest 3-month lows likely to hit the 1.17200-1.17000 level.
