An interesting performance was highlighted by movements for major currencies in the market particularly for the US dollar with a focused focus on the publication of surprising US inflation data.
The US annual inflation rate rose to 7.5% in January higher than expectations of 7.3%. The monthly reading also increased to 0.6% compared to expectations for a decline.
The price chart of the EUR/USD pair shook in the New York session yesterday with the initial price reaction to the published inflation data saw the price make a decline following the strengthening of the US dollar.
However, the price failed to press lower to pass the support zone at 1.14000 and again made a surprise when it jumped over 100 pips to record the latest high around 1.13940 surpassing the high reached last week.
It is likely that market players will take advantage of the US dollar's buying position to expect the US dollar to move stronger after this with clearer expectations for the Federal Reserve (Fed) to tighten policy.
The end of the New York session again saw the US dollar show a rebound as it was influenced by the increase in US 10 -year treasury yields which jumped above the 2%level.
Thus, the price plunged back on the EUR/USD chart to retest the 1.14000 support zone continued in the Asian session this morning (Friday).
Analysts now see the price more likely to continue declining below the 1.14000 level continuing until next week’s trading.
The RBS (resistance become support) zone of 1.12700 is the target for the downside on the bearish trend that is expected to begin.
Further declines could reach the support zone of 1.11300 if the strengthening situation of the US dollar continues.
On the other hand, if the price increase occurs, the highs reached yesterday will be tested again before the higher rise will lead to the level of 1.15300 which was the focus zone in October and November trading last year.
