The strengthening of the US dollar since the beginning of the week was hampered by US inflation data published in the New York session yesterday with a weak reading.
True to market forecasts, the US consumer price index data for July recorded a reading of 0.5% as expected, down from the previous reading of 0.9%. The core inflation reading fell lower to 0.3% compared to the expected decline of 0.4%.
Meanwhile, the development of discussions between members of the Federal Reserve (Fed) is seen to slightly ease expectations to implement a reduction in bond purchases (tapering).
The latest signals that have eroded investor confidence in the US dollar began to push back the US dollar’s decline in the New York session yesterday after a good performance in previous sessions.
On the price chart of the EUR/USD pair, the price that has made a decline from the beginning of the week up to the support zone of 1.17000 before the price increase is displayed again.
Investors are wary of seeing early signals of a bullish trend change after the price spike passed the Moving Average 50 (MA50) barrier level on the 1 -hour time frame on the EUR/USD chart.
If the US dollar continues to depreciate until the end of trading this week, the price is likely to have the potential to reach a rise again to the level of 1.18000.
A higher rise above the 1.18000 level will next head back to the previous focus resistance zone at 1.19000.
However, if yesterday's price increase is just a price correction and the initial price decline will test the support zone 1.17000 again.
A decline penetrating the zone will record the latest price lows for the year with initial expectations heading to the level of around 1.16000.
