As expected, market movements were brisk in the New York session yesterday when the focus was on the presentation of the monetary policy report by Federal Reserve (Fed) Chairman Jerome Powell.
Giving a clear signal, Powell stated that the central bank would be ready to increase the pace of interest rate hikes again indicating a transition to the monetary policy tightening phase again.
Interest rates are expected to rise to 50 basis points ahead of the policy-setting forecast at the latest FOMC meeting after Powell's statement.
Powell's hawkish signal had the effect of a surge in the value of the US dollar yesterday, sinking all major currencies in the market.
As can be seen on the price chart of the EUR/USD currency pair, a daily plunge of up to 150 pips was recorded yesterday.
The price, which failed to continue its rise past the 1.07000 resistance zone, saw a significant drop in price before closing the trade at the low level of 1.05500.
The bearish price signal is more clearly visible after the price moved back below the Moving Average 50 (MA50) barrier on the 1-hour time frame on the EUR/USD chart towards the support level reached earlier in the previous week.
The drop is expected to continue to the 1.05000 support zone and is likely to continue further declines to around 1.04000 to record a new 9-week low.
But be careful if the situation changes and prices start to rise again when the market is still cautious ahead of the publication of the United States (US) NFP employment data report.
The initial level at 1.06000 will be the focus to be tested before the rise if successful continues will return to the resistance zone at 1.07000.
