EUR/USD accelerates its downtrend ahead of the ECB's decision

EUR/USD is coming under growing bearish pressure heading into the outcome of the European Central Bank's (ECB) monetary policy decision on Thursday. A feeble recovery attempt has been capped at the 1.1635 area before retracing previous gains and hitting fresh two-week lows below 1.1580 at the time of writing, despite the upbeat Eurozone data seen earlier on the day.

Eurozone's preliminary GDP data revealed that the economy accelerated to 0.2% in the third quarter, beating expectations of a 0.1% growth. Apart from that, the economic sentiment has improved beyond expectations, with confidence in the industrial and services sectors' activity also improving.

Earlier on the day, US President Donald Trump affirmed on Thursday that he had an "amazing" meeting with Chinese President Xi Jinping. The US will reduce tariffs on Chinese imports while the Asian country will keep rare earths trade flowing, resume purchases of US soybeans, and stop the fentanyl trade.

The reaction of Chinese President Xi has been more laconic, but he acknowledged a consensus on "important economic and trade issues". Investors have welcomed the news, but the market reaction has been moderate.

On Wednesday, the Federal Reserve cut interest rates by 25 basis points (bps) as widely expected, but Chairman Jerome Powell shocked markets, putting into question another cut in December. The US Dollar surged across the board following Powell's press conference.

Daily digest market movers: The Euro loses ground as market sentiment sours

• The positive comments after the China-US trade negotiations lifted market sentiment somewhat, allowing the Euro to regain some losses earlier on Thursday, but market sentiment soured as investors suspect that the agreement is just another kick forward to the can.
• On Wednesday, the Fed cut interest rates by 25 bps to the 3.75% - 4.0% range, yet with voters showing a wide divergence. There were two dissenters on the committee, one called for a 50 bps rate cut while the other wanted to hold rates steady.
• The shock, however, came when the Fed Chair Jerome Powell said that the path forward "is not a foregone conclusion – far from it", as the combination of rising inflation and higher unemployment poses conflicting monetary policy needs. Investors pared back hopes of a December rate cut in favour of January, and the US Dollar rallied.
• In the Eurozone, the preliminary Q3 GDP has shown a 0.2% increase, from 0.1% in the previous quarter and beyond market expectations of a steady 0.1% growth. Year-on-year, the region's economy grew at a 1.3% pace, below the previous quarter's 1.5% but also beating expectations of a 1.2% growth.
• The European Commission's Economic ªSentiment Indicator has improved to 96.8 in October from 95.6 in September, beyond the market consensus of a 95.7 reading. Likewise, Industrial confidence has risen to -8.2 from -10.1, beating the market forecasts of a -10.0 reading, and Services Sentiment improved to 4 from 3.7 against expectations of a decline to 3.3. Consumer Confidence has remained steady at -14.2.
• The Unemployment rate has remained at 6.3% in September, unchanged from the previous month, in line with the market consensus.
• Somewhat earlier, German preliminary Q3 GDP figures revealed that the economy stalled, following a 0.3% contraction in the previous quarter. The yearly GDP has bounced up to a 0.3% growth after a 0.2% contraction in Q2, in line with expectations.
• The highlight of the day will be the ECB's monetary policy decision, due at 13:15 GMT. The bank will, highly likely, leave its Rate on the Deposit Facility unchanged at 2% but investors would be eager to know whether this is the terminal rate or if there is still room for further monetary easing.

Technical Analysis: EUR/USD breaks below the triangle pattern

The EUR/USD recovery attempt has been capped at a previous support area near 1.1630, giving bears fresh hopes. The pair has confirmed the breach of a triangle pattern extending below 1.1580, and exposing the key support area around 1.1545 (October 9 and 14 lows).

Technical indicators are pointing lower, but the mentioned 1.1545 might challenge bears. Below here, the 1.1500 round level is a plausible target ahead of the measured target of the triangle pattern is at the 1.1450 area.

To the upside, the pair should regain the mentioned 1.1580 (October 29 low) and the session high, at 1.1635, to ease downside pressure. Above here, the next target would be the October 28 and 29 highs, at the 1.1670 area.