The US dollar suffered a serious crash in the New York session yesterday, hit by the publication of the United States (US) inflation data.
Looking at data readings, US annual inflation was recorded at 7.7% in October, a lower figure than September's 8.2%, and beating expectations for a 7.9% decline.
Having experienced a decrease in inflation for 4 consecutive months, this 7.7% level is the lowest since January 2022 after the highest level was reached last June at the peak of 9.1%.
The decline in the inflation rate has had a significant depreciation effect on the US dollar following the dismal US NFP jobs report published at the end of last week.
Thus, the price on the chart of the EUR/USD currency pair has displayed a daily surge of up to 280 pips on Thursday yesterday.
At first the price drop was seen in the European session testing the 0.99500 concentration zone before the impact of the US dollar's decline in the New York session pushed the price past the 1.01000 resistance and reached a height of 1.02200 at the end of the session.
This is the highest price recorded for the 12-week trading period.
A further move higher would be expected to lead up to the 1.03000 highs if the US dollar remains on the decline.
However, there is a risk that a change in price direction may occur as a result of the surge in Covid-19 cases in China which will affect market sentiment and may encourage a re-strengthening of the US dollar.
If the US dollar strengthens again, the price could plunge back below the 1.01000 level after testing the concentration zone.
A further drop in price will return to the 1.0000 parity zone before further price movement signals will be scrutinized by investors to see if the price trend changes again.
