EUR/USD Forecast: A bit oversold after Draghi's blow, ahead of the NFP

EUR/USD is battling the 1.1200 level after hitting a low of 1.1176, the lowest since June 2017. The primary driver was the dovish decision of the European Central Bank on Thursday. 

President Mario Draghi and his colleagues decided to push back the forward guidance on raising interest rates from September to the end of the year. Also, they announced a new funding scheme called TLTRO 3. The additional monetary stimulus came as the ECB slashed growth forecasts from 1.7% to 1.1% for this year and citing downside risks. Draghi was upbeat on the employment situation but in general, painted a darker picture. 

Markets had expected a dovish turn, but it came sooner and stronger than had been anticipated, sending the euro plunging. 

More: Draghi quick analysis: 5 factors that downed EUR/USD and the big levels to watch

The data remains unfavorable for the common currency, with German Factory Orders plunging by 2.6% in January. Despite an upward revision for December, concerns about the continent's powerhouse persist.

Worries also come from China, which reported significant drops in both imports and exports in February, strengthening Draghi's point about a global slowdown. However, data may have been skewed due to the Chinese New Year.

The focus now shifts to the US with the all-important Non-Farm Payrolls data for February. After gaining an impressive 304K positions in January, a more modest increase of 180K is expected. Average hourly earnings are projected to advance by 0.3% MoM and 3.3% YoY.

The US labor market remains robust, and any upside surprise increases the chances that the Fed will raise rates in the latter part of the year, as some suspect, after "patience" runs out. 

See:  Non-Farm Payrolls Preview: Labor market defiance

EUR/USD Technical Analysis

EUR/USD continues suffering from significant downside Momentum, but the Relative Strength Index (RSI) is still below 30, indicating oversold conditions. These conditions imply a few more pips of a recovery within the downtrend. 

Initial support awaits at 1.1190 that provided some support in recent hours. The next line to watch is 1.1176 which is the fresh 2019 low. 1.1110 and 1.1025 were substantial levels back in 2017.

Resistance awaits at 1.1215 which was the 2018 low recorded last November. 1.1235 was the previous 2019 low seen in February, and it is followed by 1.1250, 1.1275 and 1.1290.

More: EUR/USD path to the downside is easy after Draghi's drag – Confluence Detector