EUR/USD drops after dovish ECB comments

It was another bad day for the euro as the EURUSD pair declined half a percent to trade slightly below the 1.11 handle during the US session on Thursday.

Earlier in the day, the ECB Governing Council member Olli Rehn said the ECB "will announce a package of stimulus measures at its next policy meeting in September that should overshoot investors' expectations." 

Moreover, he added that “It’s important that we come up with a significant and impactful policy package in September,” Finally, he said that “When you’re working with financial markets, it’s often better to overshoot than undershoot, and better to have a very strong package of policy measures than to tinker”

Traders sold the euro afterward, which plunged against all of its major peers. 

From other news, US retail sales surprised on the upside, having printed 0.7%, up from 0.3% previously, which was also the market consensus for today's number. Moreover, the control group indicator accelerated higher as well, rising from 0.7% to 1.0%.

Additionally, initial jobless claims rose to 220,000 from 211,000 in the previous week, while continuing claims also worsened from 1.687 million to 1.726 million.

Technically speaking, should the EURUSD pair decline below the 1.11 threshold, we could see another test of August' lows near 1.1020. However, bears need to push the single currency below 1.10 to confirm the downtrend. On the other hand, the euro usually rockets higher after posting new lows and this scenario could be in play yet again after dropping below 1.10.

Alternatively, the resistance seems to be in the 1.1230 area and as long as the pair remains below this zone, the short-term outlook seems bearish. From the intraday perspective, offers could be located near 1.1130.