Being the main focus in the New York session yesterday was the publication of the consumer price index (CPI) data of the United States (US) for the month of April which has invited an interesting reaction from the market.
Expected to remain at 5.0%, the US annual inflation rate was slightly lower at 4.9%, marking a 10-month consecutive decline in inflation to the lowest level since April 2021.
This had the effect of an initial decline in the US dollar as soon as the data report was published, but recovered towards the closing trade of the New York session.
Heading into the next policy meeting, the market sees a clearer projection for the Federal Reserve (Fed) moving towards easing monetary policy after the inflation readings have been declining.
However, it is necessary to further examine the data that will be published after this following the positive NFP employment report last week still leaves room for policy tightening to be continued by the Fed.
Assessing the price movement on the EUR/USD chart yesterday, there was a price surge when the initial reaction to the data was published but the movement was not so drastic with relatively limited momentum.
Initially the price which was at the support level of 1.09500 has surged to reach the focus level of 1.10000 again following the initial decline of the US dollar.
However, the price bounced back down from the 1.10000 level before finally closing the trade at the end of the session slightly lower.
Continuing the opening of the Asian session this morning (Thursday), the price hovered slowly below the 1.10000 level but was above the support level of the Moving Average 50 (MA50) on the 1-hour time frame which signaled a bullish movement.
The price needs to make an increase past 1.10000 before investors can expect a higher increase to continue the price with the US dollar expected to weaken until the end of the week.
The rise will return to the resistance zone at 1.10800 and if it succeeds in breaking higher, the price will record the latest high level with the next target at 1.12000.
However, if the situation changes towards the end of this week, the price that plunged from the 1.10000 zone will go to the 1.09000 support zone.
If this zone fails to contain further price falls, the concentration level at 1.08000 is likely to be hit again.
