EUR/USD: downside playing out on DXY strength, Draghi speaking in Brussels

Ross J Burland FXStreet

EUR/USD has been in supply at the start of this week in European and US markets, recently breaking down below the 1.23 handle with the DXY recovering back towards 90.00 from lows of 89.5030. Currently, EUR/USD is trading at 1.2295, up 0.00% on the day, having posted a daily high at 1.2356 and low at 1.2280 while traders look for clues on policy and particularly on the ECB's massive quantitative easing programme while ECB president Mario Draghi is speaking at the ECON Hearing of the European Parliament in Brussels, Belgium.

There will be a Q&A session as well, but so far, the key comments came as follows:

ECB's Draghi: The euro area economy is expanding robustly.
ECB's Draghi: Growth is stronger than previously expected.
ECB's Draghi: Inflation has yet to show more convincing signs of a sustained upward adjustment.
ECB's Draghi: Inflation path still conditional on ECB stimulus.
ECB's Draghi: We anticipate that headline inflation will resume its gradual upward adjustment.

Earlier in the day, ECB Governing Council member Benoit Coeure was out on the wires delivering the welcome address at the first meeting of the Working Group on Euro Risk-Free Rates, at the ECB, Frankfurt.

In other Central Bank speeches this week, we have the first testimony by new Fed chair Powell to a House committee on Tuesday:

ECB’s Coeure on the importance of euro interest rate benchmark reforms

In data:

USD New Home Sales Change (MoM) (Jan) -7.8% 3.2% -7.6%
USD New Home Sales (MoM) (Jan) 0.593M 0.645M 0.643M
USD Dallas Fed Manufacturing Business Index (Feb) 37.2 28.4 33.4

EUR/USD levels

The technical picture is now leaning more bearish with RSIs biased to the downside. 1.2270/80 guards 1.2250 ahead of 1.22 the figure. Further out, the January 18 low at 1.2165 would be next in focus head of the 2017-2018 uptrend at 1.2044. On the flip-side 1.2330 needs to be broken with positive closes above it for a run to 1.2380 through the 21-D SMA, (1.2365).

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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