The greenback found some support late Wednesday on FED's Yellen hawkish comments, who anticipated that the Central Bank is willing to raise rates "a few times a year" until reaching what they consider a long-run neutral rate of 3%. The EUR/USD pair fell down to 1.0623 early Asia, from where it slowly started a recovery that extended during the European morning up to current 1.0660 region.
The upcoming ECB monetary policy meeting in a couple of hours keeps investors in cautious mode, but given price behavior, is clear that the dollar is intrinsically weak, and that the Trump-trade is over. The European Central Bank is expected to keep its bond-purchase program unchanged, although speculative interest is counting on a hawkish Draghi. Inflation in the EU has finally gave signs of life by the end of 2016, jumping above 1.0% for the first time in over three years, and seems unlikely that Super Mario won't say anything about it.
Furthermore, investors will be looking for any comment regarding tapering, the possibility of reducing the ongoing easing down to zero. In the previous meeting, and according to Draghi, the matter wasn't discussed.
From a technical point of view, the pair presents a neutral-to-bullish stance, with indicators holding within positive territory, but with no certain directional strength, and the price hovering around a bullish 20 SMA.
The key resistance is 1.0710, the 38.2% retracement of the latest monthly slide, with and advance beyond it favoring an extension towards 1.0750 first, followed later by 1.0800. Seems unlikely Draghi will disappoint, but if he does, 1.0620 is the level to watch, as below it, the pair can extend its decline down to 1.0565, the 23.6% retracement of the same slide.
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