EUR/USD Analysis: Draghi put the final nail on EUR's coffin

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1259

ECB's to keep rates unchanged until THE end of 2019, new TLTRO announced.
US minor employment data better-than-expected ahead of Friday's NFP.

The EUR/USD pair spent the first half of the day trading mute just above the 1.1300 level, falling initially to 1.1280, following the ECB's announcement on monetary policy. The central bank pushed back on its guidance about interest rates, expected now to remain at their present levels 'at least through the end of 2019, and in any case for as long as necessary.' Additionally, policymakers announced a new series of quarterly targeted longer-term refinancing operations (TLTRO-III), which will be launched in September this year through March 2021. Ahead of the press conference, the pair lost further ground, now trading at fresh 3-week lows and not far from its yearly low of 1.1233, as ECB's Draghi started his statement by saying that the near-term growth outlook is weaker than anticipated, therefore affecting inflation. He added that the measures taken are meant to support inflation.

Meanwhile, the US has just published minor employment figures, all of them encouraging and supportive for the greenback ahead of Friday's NFP report. According to the official releases, weekly unemployment claims decreased to 223K, better than the 225K expected, while the Unit Labor Cost in Q4 increased to 2.0%, more than doubling the previous reading. Furthermore, Nonfarm productivity in the same period increased by 1.9%.

The EUR/USD pair trades around 1.1260, poised to extend its decline according to intraday readings, as in the 4 hours chart, technical indicators head south almost vertically, with the RSI already in oversold territory. An early advance was rejected by selling interest aligned around a bearish 20 SMA, which keeps heading south below the larger ones. The pair has this year low at 1.1233 and 2018 low at 1.1215, making of the 1.1210/30 region a possible bearish target and an inflection point, as once below the bearish trend is set to continue.

Support levels: 1.1220 1.1185 1.1140

Resistance levels: 1.1300 1.1340 1.1375

View Live chart for the EUR/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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