The right move for the US dollar at the start of 2022 trading when it managed to regain strength earlier this week after displaying a dismal performance until the close of 2021 trading last week.
Previous analysts have already placed confidence to see a strengthening for the US dollar in 2022 with a phase of policy tightening by the Federal Reserve (Fed) as announced at the last FOMC meeting.
However, the initial strengthening of the US dollar, especially in the New York session yesterday, was seen to be influenced by the surge in the 10-year US treasury yield which has re-crossed the 1.60%level.
The US manufacturing PMI data of the ISM survey to be published today (Tuesday) will add to the momentum of the US dollar’s movement in tonight’s New York session.
Examining the price chart of the EUR/USD currency pair yesterday, the start of 2022 trading was interesting when the price has started to show more aggressive movements with a daily decline of around 90 pips recorded.
Plunging back below the Moving Average 50 (MA50) support level on the 1 -hour time frame has given an early signal for a bearish trend with expectations of a new US dollar strengthening about to begin.
The support zone at 1.12500 which was the focus at the end of last year will be an important target to test.
The lower decline will be more attractive for investors to assess the price reaction testing the key support zone at 1.12000 which is the lowest price -hit zone in 2021.
However, if the price manages to make a rebound, the resistance zone at 1.14000 remains the benchmark for bullish resistance.
The price has yet to break that important resistance after 7 weeks of moving below the zone.
