• Dovish ECB interest rate outlook prompts some aggressive selling.
• Technical selling/resurgent USD demand aggravates the downfall.
The post-ECB selling around the shared currency remains unabated, with the EUR/USD pair extending its weakness farther below the 1.1700 handle.
Currently trading around the 1.1675-70 region, the pair has now retreated nearly 200-pips from intraday tops and the ongoing slump could be solely attributed to the ECB's dovish twist, indicating that rates will remain at current historic lows at least until the summer of 2019.
In the post-meeting press conference, the ECB President Mario Draghi reinforced the statement and said that the governing council did not discuss when to raise rates, citing an undeniable rise in uncertainty due to geopolitical reasons.
This coupled with resurgent US Dollar demand, further supported by stronger than expected US monthly retail sales data, further aggravated the selling pressure and contributed to the pair's sharp downfall to 1-1/2 week lows.
Meanwhile, technical selling/long-unwinding pressure, on a sustained break below the 1.1725 strong horizontal support could also be one of the factors behind the pair's latest leg of sharp fall over the past hour or so.
It would now be interesting to see if the current downfall marks the resumption of prior depreciating move or the pair is able to find some buying interest at lower level amid highly oversold conditions on the 1-hourly chart.
Technical levels to watch
A follow-through weakness below 1.1655-50 area has the potential to continue dragging the pair further towards early June swing lows support near the 1.1620-15 region en-route the 1.1600 round figure mark.
On the upside, any meaningful recovery attempts might now confront immediate resistance near the 1.1725 zone, which if cleared might trigger a short-covering bounce back towards reclaiming the 1.1800 handle.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.