EUR/USD Drops to Test 1.1300
The euro dropped further against the US dollar and fell to 1.1300 hitting a new daily low. So far EUR/USD has been able to remain above 1.1300 but continues to hold a bearish intraday tone.
The common currency, the yen and the Swiss franc are the worst performers in the currency market of the American session as stocks turned positive in the US and while crude oil prices rise further.
EUR/USD is falling so far today approximately 60 pips, erasing yesterday’s gains. It found resistance yesterday and also today around 1.1385 and then started the decline. On Tuesday, the pair posted the third daily gain in a row and appeared to be ready for a test of April highs but it reversed.
EUR losses strength ahead of ECB
Tomorrow the European Central Bank (ECB) will hold its meeting. No change in rates is expected and Mario Draghi’s words will be listening closely. “There are some market talks doing the rounds that Draghi is willing to turn on the printing machine, and drop some "helicopter money" to fuel the local recovery, but is yet to be seen if it is legally possible within the EU. Nevertheless, and when it comes to the ECB, the market does not usually react to the facts, but to the words. If super-Mario comes back to this concept during the press conference, the FX board will likely suffer a temporal earthquake”, said Valeria Bednarik, Chief Analyst at FXStreet.
Regarding the technical outlook Bednarik affirms that EUR/USD has lost its bullish strength after faltering around a major long-term resistance level, the 1.1460 region that has contained the pair since January 2015. “But a downside continuation won't be confirmed until the pair breaks below the 38.2% retracement of its latest bullish run at 1.1220”.
On the upside, ahead of the ECB meeting, she sees resistance coming at 1.1400, with a recovery above implying a test of 1.1460. “Large stops are suspected above this last, and a break above it should lead to a rally up to 1.1500 and beyond.”
(Market News Provided by FXstreet)