Investors are seen turning back to a more dovish view of policy tightening by the Federal Reserve (Fed) with expectations for interest rate hikes that are likely to slow down.
This is due to the publication of the United States (US) manufacturing and services PMI data which recorded a more gloomy reading than expected, indicating that the world's largest economy is still approaching the risk of recession.
This factor is seen to be the cause of the re-decreasing of the US dollar in the New York session yesterday, ending the excellent performance that continued since last week.
In the European session yesterday, the same data reading for the European economy was also published, but it was seen that it did not have a significant impact despite the decline in the value of the Euro.
On the other hand, the Euro takes advantage of the situation of the US dollar's decline to return to trade and rise again towards the parity level of €1=$1.
On the price chart of the EUR/USD currency pair yesterday, the price was seen to have bounced back in the New York session after initially making a drop to the latest 20-year low around 0.9900 in the previous session.
Due to the weakening of the US dollar following the reaction to the published data, the price has surged to retest the 1.0000 parity level which is the latest resistance for the price.
Failing to break through higher levels, the price eased back slightly to close the New York session close at around 0.99700.
Slow price movement resumed trading at the opening of the Asian session this Wednesday morning which slightly decreased to a level around 0.99500.
The price is also seen to be blocked at the Moving Average 50 (MA50) barrier level on the 1-hour time frame on the EUR/USD chart which still gives an indication for the price to continue the bearish trend.
If the decline continues, prices are likely to break through yesterday's lows and possibly hit new 20-year lows.
The target for a lower decline is seen in the zone around 0.98000 which is moving away from the parity level.
On the other hand, if the price manages to continue yesterday's surge pattern, the price increase will once again test the 1.0000 parity resistance.
If it manages to break through, the bearish trend reversal signal will push the expectation towards the next focus resistance level at 1.01000.
