Market movements at the opening of the week yesterday were quite mixed as investors were still digesting the important economic data that had been published, but the US dollar managed to show strengthening in the New York session.
The strengthening of the US dollar is still seen as receiving positive momentum from the encouraging US NFP employment report published last Friday.
This situation is seen to leave room for the Federal Reserve (Fed) to continue policy tightening, but Chairman Jerome Powell seemed to give the impression at last week's FOMC meeting that interest rate hikes will be stopped.
The answer will likely become clearer after the market examines US inflation data to be published this week.
Examining the price chart of the EUR/USD currency pair, the price showing an increase in the Asian session yesterday reached 1.10500 before leveling off in the European session around that.
Then the bearish pattern was displayed again in the New York session with the price seen back to the expected level of 1.10000.
The decline that also crossed the Moving Average 50 (MA50) level on the 1-hour time frame on the EUR/USD chart also signaled for the price to continue the previous bearish movement.
If the price continues to decline below the 1.10000 level today (Tuesday), the support zone at 1.09000 is seen to be the focus to target and the price will also try to overcome the lowest level reached last week.
If the lower decline continues, the price target could reach around 1.08000.
However, if the price manages to survive the fall and bounce back from the 1.10000 level, an increase can be expected to return to the resistance zone at 1.10800 which has been price tested for 2 consecutive weeks before.
If the rise continues above the following resistance, the latest 14-month high level will be recorded with the next price target being at 1.12000.
