EURUSD hits multi-month low after Draghi; psychological 1.20 support comes in focus

The Euro spiraled to the lowest levels since Jan 12 after the ECB President Draghi’s press conference today.

Draghi did not say anything significantly different from Central Bank’s last meeting, but market initially took his comments as not dovish as expected and sent Euro to the session high at 1.2209, but gains proved to be short-lived.

Draghi said that underlying inflation remains subdued but expected to pick up and move towards projected levels.

Eurozone growth remains solid, with recent softer than expected indicators require caution but some normalization of growth could be expected.

Regarding bond buying program, which was focused today, Draghi pointed again that ample degree of monetary stimulus is still needed.

With Draghi’s comment being insufficient to produce stronger thrust, the Euro fell lower, also driven by stronger dollar on higher US yields.

Strong bearish signal is developing on daily chart as fresh weakness probes below the floor of multi-month congestion (1.2150/1.2555), with firm break lower expected to spark fresh acceleration lower, in extension of recent steep descend from 1.2413 (17 Apr high).

If the greenback extends its rally, the Euro could easily fall to strong support at 1.2000 (psychological support / 200SMA).

The pair is on track for another bearish end of the day, as red daily candle with long upper shadow is forming and expected to further weigh on the Euro.

On the other side, oversold techs continue to warn of corrective action, but without any firmer bullish signal seen so far. 

Upper pivots lay at 1.2213/35 (broken 100SMA / daily cloud base) and only clear break higher would sideline strong downside risk.

Res: 1.2153; 1.2172; 1.2213; 1.2235
Sup: 1.2092; 1.2054; 1.2000; 1.1936