The strengthening momentum of the US dollar is expected to return after the US inflation rate is still hovering at a 40 -year high based on data readings published in the New York session yesterday.
The reaction was somewhat mixed by the US dollar after the data was published, however ending the trade towards the end of the session with a strengthening pattern although not so noticeable.
The Euro remained gloomy throughout the week with economic pressures on the issue of Russia's oil embargo and the uncertainty of the Brexit negotiations that continued to impact Europe.
However, investors got a positive signal for the Euro when European Central Bank (ECB) President Christine Lagarde said the central bank would raise interest rates as early as this July to follow in the footsteps of other major banks that have already moved into a policy tightening phase.
Examining the price movement on the chart of the EUR/USD currency pair, the price remained hovering in the sideway zone since last week until Wednesday's trading yesterday.
The decline only tested the 1.0500 support zone which is the lowest price zone for 5 years, and still supports the price since the end of April.
The initial signal for a bearish movement after the price moved below the Moving Average 50 (MA50) barrier level on the 1 -hour time frame on the EUR/USD chart opens the expectation for a lower price drop breaking the 1.0500 support.
The lower decline is seen to lead to the 1.0400 zone, which is the price support zone in December 2016 trading, and at the same time continue to record the latest 5 -year low.
On the other hand, if the price displays a bullish pattern, the resistance zone that will be tested is at 1.0600 which has been the focus last week.
A higher rise beyond the zone will give a more positive bullish signal with the next price target being towards the 1.0700 level or the 1.0800 focus zone again.
