As expected by the market, after being 'sluggish' since the beginning of the week, the price movement was brisk in the New York session yesterday with the reaction to the United States (US) published inflation data.
The annual reading of the US consumer price index (CPI) data for December was in line with forecasts to fall to 6.5% after the previous reading of 7.1%.
This shows the decline in US inflation for 6 consecutive months showing the effect of monetary policy tightening by the Federal Reserve (Fed) last year.
What happened to the US dollar after the CPI data was published?
The drastic movement of the US dollar saw value fluctuations in a large range, but finally closed the trade at the end of the New York session weak again.
On the price chart of the EUR/USD currency pair, investors evaluate the signal of a clearer bullish trend movement after the US dollar continues to decline towards the opening of the Asian session this morning (Friday).
However, when the data was published, the price was seen to surge past 1.08000, then plunge briefly with the daily low recorded around 1.07300.
Testing the 1-hour Moving Average 50 (MA50) support level on the EUR/USD chart then saw the price bounce back to reach a recent 9-month high of 1.08670 after a rise of around 140 pips.
The price increase is expected to continue at the end of this week to reach the 1.09000 concentration zone.
If it manages to continue climbing higher, the price has the potential to go up to the 1.1000 level.
However, if it makes a decline again at the end of this week's trading close, the price that drops back below the 1.08000 level will be observed either to break through the MA50 support level or vice versa.
If the penetration is lower, the price will go back to the RBS zone (resistance becomes support) at 1.07000.
