Focusing on the early opening of the New York session last night, the European central bank's (ECB) policy meeting met expectations to raise interest rates by 75 basis points to 2.00%, the highest level since 2009.
But what surprised the market was the impact on currency movements when the Euro failed to strengthen after the interest rate hike decision.
This is due to the focus on the follow-up statement by the President of the ECB, Christine Lagarde, who is less hawkish than before when concerns are directed towards slow economic growth.
Economic activity is assessed to be slow in the third quarter and it is expected that slow growth will continue into next year.
Meanwhile, the US dollar then began to show strengthening following the publication of the economic growth data of the United States (US) for a strong third quarter.
This situation again strengthens expectations for the Federal Reserve (Fed) to continue aggressive policy tightening for the remaining policy meetings until the end of 2022.
The price chart of the EUR/USD currency pair is starting to show signs of a change in the downward direction again after the bullish pattern continued until Wednesday.
The daily decline on Thursday yesterday was recorded around 130 pips to trade below the 1.0000 parity level again.
The slow movement of prices continued in the Asian session this morning (Friday) below the level of 1.0000 is also seen to have fallen below the barrier level of the Moving Average 50 (MA50) which is an indication of a change in the bearish trend.
If the price continues the decline lower, the 0.99000 zone is seen to be the initial focus to be tested before the price continues the decline to around 0.98000.
However, if the price manages to break above the 1.0000 parity zone and resume the previous uptrend, the resistance at 1.01000 will once again become a price target.
Breaking through that resistance would mark a recent 6-week high and potentially reach around 1.02000.
