Ahead of the FOMC meeting at the beginning of Thursday, the US dollar at the beginning of the week was seen to be trading strongly, opening the trading curtain for May.
The strengthening of the currency king was triggered in the New York session yesterday after the United States (US) manufacturing sector survey data was published showing a positive reading.
The Federal Reserve (Fed) is expected to raise interest rates by 25 basis points at its latest policy meeting and investors are looking for an indication of whether rate hikes will be halted after this meeting or whether there is still room for further policy tightening.
The results of the meeting will be evaluated and will drive the movement of the US dollar afterwards.
Assessing the price movement on the EUR/USD currency pair chart yesterday, the price dropped back below the 1.10000 level in the New York session after the increase in the previous session reached around 1.10350.
The price drop that took place once again tested the support level that was reached last Friday around 1.09700 before slowly closing the end of session trading around that area.
A bearish signal was observed after the price started to move below the Moving Average 50 (MA50) barrier level on the 1-hour time frame on the EUR/USD chart.
The price was seen to bounce slightly when resuming trading at the beginning of the Asian session this morning (Tuesday) to head back to the 1.10000 level and the price reaction will be observed.
If the price continues to decline further today, the next concentration of the price is seen at around 1.0900 which was previously a support zone for the price.
A further drop after a more clear bearish signal will target up to the 1.08000 level.
However, analysts warned that the US dollar could weaken again at any time due to expectations of the Fed's monetary policy moving in a looser direction.
In addition, the Euro currency has the potential to strengthen this week following the expected policy tightening that will be continued by the European Central Bank (ECB) at the policy meeting this Thursday.
If the US dollar weakens again and the Euro strengthens, the price could surge above 1.10000 and break through the MA50 barrier to signal a trend change.
The rise will continue back to the 1.10900 height zone that was reached last week before the price recorded the latest high level.
The target for a higher move is at 1.12000 which could potentially be reached if the US dollar weakens further after the FOMC meeting.
