The US dollar is seen to be the main driver of the market with mixed data readings over the past week.
Let’s take a look at the price movement on the EUR/USD currency pair chart.
After several times testing the resistance level of 1.21800 earlier in the week, the price plunged on Wednesday following the US inflation data published for April recording a rise to a 13 -year high!
The price that tested the Moving Average 50 (MA50) resistance level on the 1-hour time frame slipped lower to the RBS (resistance become support) zone of 1.20900-1.20600.
Prices flattened on Thursday trading before rising again on Friday. The rise in prices was driven by the re -depreciation of the US dollar after disappointing US retail sales data readings.
The price moved back above the support level of MA50 and reached the resistance level of 1.21500 continuously at the opening of trading earlier this week.
The 1.21500-1.21800 resistance zone will be tested again this week if the US dollar continues to depreciate lower to overcome the highs reached last week.
The target for the next price increase is seen at the high level around 1.22500 which was the resistance for last February's trading.
But investors also need to be wary of the US dollar's strengthening situation as there is speculation that the Federal Reserve (Fed) will need to tighten policy due to rising inflation.
If the US dollar strengthens again, the price will make a decline again to the RBS zone 1.20900-1.20600 which supported last week’s price fall.
If the price falls lower below that zone, the decline is seen to lead to the main support zone at 1.2000 which was also tested in early May.
