The US dollar traded significantly weaker in the European session yesterday after a gloomy opening in the first session yesterday.
This was driven by market concerns from the report of Moody's credit rating downgrade for the United States (US) government due to high national debt.
The Euro currency took the opportunity to increase its value yesterday, but the momentum was slightly restrained in the New York session as the US dollar showed a moderate recovery.
If you look at the movement on the EUR/USD chart, the price that started a slow increase at the opening of the Asian session yesterday has continued to increase in the following session.
The significant surge in the European session exceeded the 1.12000 zone and almost touched the 1.13000 level which was the focus zone in early May trading.
As expected, the price showed a reaction to the important zone when it showed a change in price direction again.
The recovery of the US dollar in the New York session yesterday again pressed the price down to around 1.12300 and the price movement was flat until continuing into the Asian session this morning (Tuesday).
The movement signal remains bullish with the price still above the Moving Average 50 (MA50) support line on the 1-hour timeframe on the EUR/USD chart.
If the upward price pattern continues successfully, the price target after this is to penetrate the 1.13000 zone before recording a new high.
The target will then shift to the 1.14000 resistance zone that was tested at the close of April.
However, if the price drops lower below the 1.12000 level again, it is likely that a bearish movement will begin.
An extended decline will push the price back towards the support zone tested last week, which is at 1.11000.
