The US dollar suffered a sharp decline in the New York session yesterday after a surprise reading of the latest published United States (US) inflation data.
Taking center stage this week, the annual reading of the US consumer price index (CPI) came in at 3.0% for June, down from a forecast of 3.1% from May's level of 4.0%.
Alongside last week's dismal NFP jobs data, this reinforced policymakers' assertions that the tightening phase is nearing its end.
Other major currencies including the Euro took advantage of the space to strengthen and managed to reach their latest highs since April 2022.
On the chart of the EUR/USD pair, a daily gain of around 120 pips was recorded yesterday after the surge in the New York session.
The price has made gains above the highs reached last May until it reached a recent high of 1.11400 at the end of the session.
With yesterday's strong momentum, the price increase is expected to continue today with a target towards the 1.12000 level.
It is not impossible for the increase to continue higher when trading ends at the end of the week.
But investors need to be alert for a price drop that can happen again.
A decline in price if it plunges below the 1.10700 zone and starts to move below the support level of the Moving Average 50 (MA50) on the 1-hour time frame on the chart will be an early signal of a trend change to occur.
The 1.10000 level will be the focus again to be tested and if it drops lower, the price will head around the 1.09000 zone which was also the focus before.
