The US dollar showed a significant depreciation in the New York session yesterday following the market's reaction to the published United States (US) inflation data.
The annual reading for the US consumer price index in November was at 7.1%, lower than expectations for a decline to 7.3%, and making inflation fall for 5 months in a row.
This further strengthens expectations for the Federal Reserve (Fed) to slow down interest rate hikes at the FOMC meeting early Thursday morning tomorrow.
The situation of the depreciation of the US dollar has been used by other major currencies in the market to trade higher.
On the chart of the EUR/USD currency pair, the price that has been moving in the horizontal zone since the beginning of this week has finally managed to jump out and record the latest high level.
With a daily gain of around 140 pips recorded yesterday, the price has surged past the 1.06000 resistance with a recent high reached around 1.06700.
However, prices eased back at the end of the New York session and continued flat into the Asian session this morning (Wednesday) around the 1.06300 price level.
After yesterday's surge, the price is expected to continue rising higher today to head towards the 1.07000 level.
A break above that level would make the latest target at the height of 1.08000 for an 8-month price high.
However, the market situation changes and it is likely that the US dollar will strengthen again, the price will change direction to make a decrease again.
A break back below the 1.06000 level would prompt a further drop back towards the 1.05000 support level.
After a clear trend change signal, the price could possibly drop to 1.04000 or 1.03000.
Investors will be cautiously awaiting the results of the FOMC meeting and also the European central bank (ECB) meeting on Thursday.
