The market witnessed turbulent price movements in the New York session yesterday focusing on the published United States (US) inflation data.
The annual consumer price index (CPI) reading for July rose to 3.2% from 3.0% the previous month, but fell short of the 3.3% forecast.
The US dollar weakened first as soon as the data was published, but after the market digested the data for a while, the US dollar strengthened again until the end of the New York session.
Analysts see a tendency for the Federal Reserve (Fed) to maintain policy tightening measures following a re-increase in the inflation rate for the first time after consecutive declines since June 2022.
You can see the effect on the price movement on the chart of the EUR/USD currency pair which saw your surge reach a high of 1.10650, slightly surpassing last week's high of 1.10400.
However, the strengthening US dollar made the price plunge back below the 1.10000 level and reached the 1.09800 level before closing trading in the New York session around that time.
The price jump was seen testing the Moving Average 50 (MA50) support level on the 1-hour time frame on the EUR/USD chart which continued in the Asian session this morning.
The price is hovering slowly below the 1.10000 level with the expectation of lower declines to continue after this.
The 1.09000 zone is seen to be the focus to target which is still the price support zone before.
A break through the zone would expect a decline towards around 1.08000 to record a recent 8-week low.
But beware in the event of a rebound at the end of this week's sessions, the price could rise again above the 1.10000 level and head towards the highs reached during yesterday's surge.
If it goes higher beyond that level it will be a bullish signal for the price with the target being directed at the height of 1.11400.
