After a dovish -toned statement delivered by Federal Reserve (Fed) Chairman Jerome Powell at the Jackson Hole economic conference last weekend, the U.S. dollar has displayed a significant depreciation.
Powell said they will carefully assess the latest economic data and risks in central bank policy-making. The dovish statement has seen a negative market reaction to the US dollar at the close of trading last week.
This situation is likely to continue the continued depreciation of the US dollar this week. However, investors are also wary ahead of the US NFP employment data report for August which will be published over the weekend.
Examining the price chart of the EUR/USD pair, the upside expectations met the forecasts of market analysts when the price re -tested the resistance level of 1.18000.
Overcoming the previous resistance around 1.17800, the price movement above the Moving Average 50 (MA50) support level on the 1 -hour time frame on the EUR/USD chart also signals a bullish movement.
Continuing the trading earlier this week, the price movement remained slow in the Asian session but slightly increased above the 1.18000 level.
Investors however remained cautious in early week trading to await clearer price signals.
With expectations for the US dollar to continue declining after a dovish signal by Powell, the price is likely to continue rising higher this week towards the resistance zone at 1.19000.
Reaching that level will record the latest price high for a period of 4 weeks.
On the other hand, if the price plunges below the 1.18000 level, the 1.17000 level will return to be the focus for price testing.
The lower decline will test the previous support level of 1.16700 before heading to the price zone of 1.16000 for a continued decline on the bearish trend.
