It was a bit of a surprise to investors at the opening trade earlier this week when expectations to see the US dollar continue its strengthening last week fell short.
The US dollar was traded weakly in the New York session yesterday following the publication of data on durable goods orders from the United States (US) recording a worse than expected figure for January.
It is also possible that there will be profit taking activity (profit taking) against the US dollar by investors at the close of trading at the end of February.
However, analysts see this situation as temporary as the US dollar is still expected to strengthen again based on expectations that the Federal Reserve (Fed) will continue to implement policy tightening.
European currencies rose significantly yesterday in addition to the latest positive news regarding Brexit.
The European Union (EU) and the UK have reportedly agreed to amend the Northern Ireland protocol which previously remained a factor of uncertainty between the two.
This factor also supported the Euro currency as the European central bank (ECB) reiterated its hawkish outlook for an interest rate hike of 50 basis points in March.
The price chart of the EUR/USD currency pair again showed yesterday's early bullish pattern to end the decline over the past week.
After leveling off at the 1.05300 level, the price has bounced back to trade above the 1.06000 level again.
The daily increase of around 80 pips recorded has broken through the Moving Average 50 (MA50) barrier on the 1-hour time frame on the EUR/USD chart, becoming an early signal of a trend change.
A higher rise if continued is seen to return to the resistance zone at 1.07000.
Passing the resistance then looking at the level of 1.08000 which is waiting to be tested.
However, be careful if the US dollar strengthens again and pressures the price to fall down like last week.
The decline will return to the support level at the beginning of the week 1.05300 and if it continues lower, the price will test the important support zone at 1.05000.
