Early trading in the New York session on Wednesday yesterday was positive for the US dollar following the publication of the United States (US) producer price index (PPI) data for September which rose higher than expected.
Next, the report of the minutes of the FOMC meeting early this morning which still sees a hawkish signal by the Federal Reserve (Fed) to continue aggressive policy tightening.
However, the strengthening of the US dollar was only at the beginning of the New York session after the PPI data was published before the movement of the currency king turned gloomy at the end of the session.
Investors are likely to be wary of trading the US dollar ahead of the release of US inflation (CPI) data tonight with the annual reading expected to decline from 8.3% to 8.1%.
The price movement on the chart of the EUR/USD currency pair which continued at the beginning of the Asian session this morning (Thursday) is seen hovering again in the 0.97000 zone after the drop in the New York session yesterday to a level around 0.96700.
Momentum started to slow with the Moving Average 50 (MA50) barrier on the 1-hour time frame on the EUR/USD chart becoming the focus of price testing.
If the effect of the US inflation data strengthens the US dollar and pushes the price down, the previous bearish trend will continue for the price to exit the sideways zone hovering around 0.97000.
The decline from the 0.97000 zone will then all lead to the support zone at 0.95500 which is the lowest price hit zone for the 20-year trading period.
But on the other hand, if the price changes direction to make an increase, the surge in price is likely to surpass the high level recorded last Tuesday.
Next, the resistance at the 0.98000 level is seen to be tested before the continued price increase can reach up to 0.99000 or higher towards the 1.0000 parity zone.
