The currency market ended February trading on Tuesday yesterday with somewhat mixed price movements.
The United States (US) consumer confidence data published in the New York session yesterday only had a temporary weakening effect on the US dollar when a shock occurred towards the end of the session.
The US dollar was initially seen to continue its decline as trading patterns last Monday returned to show a re-strengthening at the close of the New York session.
Expectations for the US dollar to be back on track to strengthen have also dampened the Euro's upward momentum at the start of the week.
Developments in Europe, the Euro continues to be supported by speculation regarding the tightening of monetary policy that the central bank will continue for a longer period than expected.
In addition, positive developments related to the Brexit agreement between the European Union (EU) and the UK also gave additional value to the European currency.
Looking at the chart of the EUR/USD currency pair, the price continued to rise until entering the beginning of yesterday's New York session reaching the level of 1.06400.
However, the price pattern started to change towards the end of the session when the US dollar was seen to strengthen again and pressure the price to fall lower to reach around 1.05740.
Continuing trading at the opening of the Asian session this morning (Wednesday), the price is moving slowly but has started to be below the Moving Average 50 (MA50) obstacle level on the 1-hour time frame on the EUR/USD chart.
This early sign of a bearish move in price has investors preparing for a further drop lower.
The decline will be expected to test the support level at the beginning of the week around 1.05300 before extending the decline to the important zone of 1.05000.
If the zone is also successfully crossed, the price will record the latest 13-week low towards the target at 1.04000.
On the other hand, if the price resumes its surge like at the beginning of the week, surpassing the high level reached yesterday, we expect the price to reach the resistance level of 1.07000.
Once the signal is clear for the bullish movement of the price, it can push the price up to reach the high level of 1.08000 again.
