Impact of CPI Reaction, EUR/USD True to Forecast Reaches $1.0900 Zone


The US dollar continued its decline in trading in the New York session yesterday and even more significantly weakened after the reaction to the published United States (US) inflation data report.

Looking at the reading of the consumer price index (CPI), the figure met the forecast to decrease to 3.4% in April compared to 3.5% previously.

The jointly published US retail sales data also came in with grim reading.

This situation strengthens expectations for interest rate cut measures implemented by the Federal Reserve (Fed), possibly as early as September.

With the significant depreciation of the US dollar, investors have seen a surge in prices on the chart of the EUR/USD currency pair after the data was published yesterday.

Previously the price has managed to make an increase past the resistance at the 1.08000 zone, and with the increase continuing, the price has managed to reach the next focus zone around 1.09000 in the Asian session this morning (Thursday).

The trend remains bullish with the price movement above the Moving Average 50 (MA50) support line on the 1-hour time frame on the EUR/USD chart, expecting further gains to continue today.

After the 1.09000 zone is passed after this, the next price increase is expected to reach a height of 1.10000.

However, it is not impossible for a surprise to occur as trading heads towards the end of the week with the risk of a change in price direction.

If the price pulls back down from the 1.09000 zone that is being tested, the price can be expected to approach the previous focus zone at 1.08000.

A drop lower than that would be a clear signal of a bearish trend change again for the price.