The United States (US) inflation data published at the New York session yesterday strengthened expectations for interest rate cuts to be implemented by the Federal Reserve (Fed) next week for the first time in 3 years.
The annual consumer price index (CPI) decreased to 2.5% as expected from the previous level of 2.9%.
Even so, the market expects an interest rate cut of only 25 basis points with the percentage expected for an aggressive cut of 50 basis points having dropped to 15%.
The US dollar has shown strengthening as soon as the data is published putting pressure on other major currencies especially the Euro which is being pressured by the expectation of an aggressive rate cut by the European Central Bank (ECB) at today's meeting.
The ECB is expected to lower interest rates by 60 basis points from the previous level of 4.25% to 3.65%.
On the chart of the EUR/USD currency pair, prices were seen to extend lower in the New York session yesterday when the reaction to the CPI data was published.
The price approached the 1.10000 zone but did not continue to drop lower, instead it was seen that there was a slow rebound reaction in the price again.
Slow price movement hovered above the 1.10000 zone in the Asian session this morning (Thursday) with the signal remaining bearish where the price is still below the Moving Average 50 (MA50) barrier line on the 1-hour time frame on the EUR/USD chart.
If the price continues to decline and penetrates the current support at 1.10000, the bearish trend will continue with the latest target for the price decline moving to 1.09000.
On the other hand if the price shows a strong surge again after this, the 1.11000 level is seen as a focal resistance to be reached and tested after a rise that breaks through the MA50 barrier.
