- Slide finds support above 1.1200 but it remains under pressure.
- EUR/USD forecasts lowered by analysts after ECB meeting.
The EUR/USD dropped further and bottomed at 1.1204, the lowest level since June 27, 2017. It rebounded modestly and as of writing trades at 1.1225/30, down 80 pips and having the worst performance since January 3.
The move lower was triggered after the European Central Bank meeting. The central bank as expected kept rates unchanged. It changed the forward guidance on rates to “at least through the end of 2019” and announced a new round of quarterly TLTRO-IIIs, starting in September 2019 until March 2021. “Mario Draghi was surprisingly soft, a sign of worry that the recent slowdown is of a more structural than temporary nature. Draghi stressed that the TLTRO announcement was part of an accommodating monetary policy stance and that all tools were available. He made it clear that the package today was an easing bias. With the recent move, we do see similarities to the Japanese monetary policy stimuli agenda in the past decade”, said Danske Bank analysts.
The actions announced today by the ECB triggered many downgrades in EUR/USD forecasts adding more bearish pressure to the euro. Also following the ECB statement the greenback accelerated its rally across the board and particularly against emerging market currencies on the back of risk aversion. Lower US yields did not stop the greenback, neither Fed’s Brainard comments. She said that rising economic risks argue for a softer Fed rate path and added she does not want to prejudge what kind of rate moves would be appropriate late in the year.
EUR/USD Levels to watch
On the flip side, the immediate support is seen at 1.1200, followed by 1.1165 (Jun. 20 2017 low) and 1.1130. On the upside, resistance now could be located at 1.1230, 1.1285 (European session low) and 1.1320.
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