Surprised the market when the US dollar returned to exhibit a more significant strengthening in Thursday's trading yesterday. What actually happened?
Investors reassessed the minutes of the FOMC meeting which were previously assessed as more dovish with expectations for the Federal Reserve (Fed) to slow interest rate hikes.
Investors began to see the opportunity for the Fed to continue aggressive rate hikes after the economic data of the United States (US) published earlier was also encouraging.
Supported by statements by Fed officials, Fed President St. Louis, James Bullard said he is inclined to support a third consecutive rate hike of 75 basis points at the September meeting.
Thus, the price movement on the price chart of the EUR/USD currency pair saw a lower price drop, recording the latest 5-week low.
The price has registered a daily decline of around 100 pips yesterday after a flat price movement above the 1.01600 support level since last Wednesday.
Passing the lowest level of 1.01200 that was reached last Tuesday, the price decline until the end of the New York session has also passed the level of 1.0100 which was previously expected to be the latest support level for the price.
Continuing in the Asian session on Friday morning, the price hovered slowly below the 1.0100 level with expectations to continue the decline lower.
The next price target is seen to return to the main support zone at the parity level of 1.0000 which was tested in trading last July.
But investors are also wary in case of profit taking activity in trading habits at the end of the week which can make the price bounce back up again.
A price increase above the 1.01000 level will retest the 1.01600 level before the next price trend change signal will push the price to the 1.02400 resistance level.
