Expectations for an aggressive monetary policy easing by the Federal Reserve (Fed) increased again in the market at the beginning of this week as well as having a weakening effect on the US dollar.
The CME FedWatch indicator shows a percentage of over 60% for a 50 basis point cut while 40% for a 25 basis point cut.
Even when the United States (US) inflation data published last week decreased, the US dollar did not continue to weaken but rather strengthened for a while as soon as the data was published.
However, towards the end of the week and continuing the opening of the beginning of the week, the US dollar moved back on track to weaken heading into the FOMC meeting early Thursday morning.
Examining the price movement on the chart of the EUR/USD currency pair, the price is seen to have continued its upward pattern at the beginning of yesterday's week after last week's drop to the 1.10000 support zone.
The price increase at the end of the week was blocked at the level of 1.11000, but in the continuation of the increase yesterday, the price managed to break through that resistance before reaching a height of around 1.11300.
The horizontal price movement around that in the New York session yesterday continued into the beginning of the Asian session this morning.
The price increase is expected to continue if the US dollar remains weak in addition to the bullish signal that the price is still moving above the Moving Average 50 (MA50) support line on the 1-hour time frame on the EUR/USD chart.
A higher increase will overcome the level reached when the previous week's NFP data reaction around 1.11500 before continuing the increase towards the target zone of 1.12000.
However, the bearish warning will be triggered again if the price starts to fall below the 1.11000 level and also crosses the MA50 support.
The price drop will be expected to return to the 1.10000 support zone that was tested last week.
