The impact of the United States (US) inflation data release in the New York session yesterday has seen volatile movements for the US dollar currency with a mixed reaction by the market.
Overall, inflation in the US is still at a high level with the monthly reading of the consumer price index (CPI) in September rising above expectations and the previous month.
However, if scrutinized, the annual base reading which increased to 8.2% exceeded the expected 8.1%, however still showed a decrease from the previous level of 8.3%.
Thus, the US dollar was seen to strengthen at the beginning of the data release, but again witnessed a more significant decline towards the end of the New York session.
It can be seen that an interesting movement occurred on the EUR/USD currency pair chart yesterday where the price initially plunged more than 100 pips when the initial reaction to the inflation data reached a new low of around 0.96300.
However, the price then bounced back around 170 pips reaching the high level of 0.98000 which is the focus resistance zone for the price.
The surge in price also signaled a bullish trend change after breaking through the Moving Average 50 (MA50) barrier on the 1-hour time frame on the EUR/USD chart and also surpassing the highs reached last Tuesday.
The price movement started to slow at the close of the New York session and continued at the beginning of the Asian session this Friday morning, the price is still hovering around the 0.98000 resistance zone.
If yesterday's surge pattern continues, the price will continue to rise higher with the next target at 0.99000.
Further, the parity zone at 1.0000 will return to the price focus again if the US dollar remains weak in the market.
However, investors still need to be alert for the expected strengthening of the US dollar due to factors that still support the currency such as market sentiment that is still risky.
If the decline occurs again, the 0.97000 zone is likely to be the initial focus to be retested before the price challenges yesterday's lows.
A further drop in price will target the 0.955000 support zone which was reached at the end of September last for the latest 20-year record low.
