CPI Handler, EUR/USD 'Shrink' Falling Plunge!

<p>&nbsp;Surprised investors when the daily decline on the chart of the EUR/USD currency pair on Thursday yesterday recorded up to more than 100 pips!</p><p><br /></p><p>Compared to before, the price moved slowly by maintaining the rising pattern since the beginning of the week, but the situation started to change.</p><p><br /></p><p>This was driven by the market's reaction to the published United States (US) inflation data which saw the reading of the consumer price index (CPI) for September remain at 3.7%, falling short of forecasts for a drop to 3.6%.</p><p><br /></p><p>The situation increased the tendency for the Federal Reserve (Fed) to continue its monetary policy tightening after a hawkish signal was delivered at the previous FOMC meeting.</p><p><br /></p><p>The price that touched a high of 1.06400 has plunged throughout the New York session reaching around 1.05300.</p><p><br /></p><p>The sharp drop in price clearly signaled a bearish trend change when the price fell below the 1.06000 level and started to move below the Moving Average 50 (MA50) line on the 1-hour time frame on the EUR/USD chart.</p><p><br /></p><p>Some weak price gains were seen in early trading in the Asian session this morning (Friday), but analysts expect further declines in prices.</p><p><br /></p><p><br /></p><p>With yesterday's dive pattern, the price will head towards the concentration level at 1.05000 to test it.</p><p><br /></p><p>If it breaks through lower, the decline will lead to the support level at the beginning of October around 1.04500.</p><p><br /></p><p>However, investors need to be aware of the risk of volatile price movements at the end of the week.</p><p><br /></p><p>The price could rise again with the closest target to be tested seen at around the 1.06000 level which was breached yesterday.</p><p><br /></p><p>The price reaction at that level will give an indication for the next price movement to resume trading in the next week.</p>