EUR/USD Turns Volatile, Drops to Session Low 1.1160 as Draghi Disappoints
As the ECB press conference got underway the EUR/USD pair turned volatile, initially jumped to the vicinity of session high but faded the spike and touched a fresh session low of 1.1160.
The ECB raised both, growth forecast and inflation forecast for 2016 but warned that economic risks remained skewed to downside. ECB President Mario Draghi also warned that weak exports and lack of growth might continue to underpin the shared currency.
The opening statements weighed on investor sentiment and switched sentiment, taking the EUR/USD pair back below 1.1200 handle. Traders now seem to wait for the presser to complete before making their next move.
Meanwhile, labor market indicators from the US were broadly in-line with consensus estimates. The ADP report showed US economy adding 173k new private-sector jobs during the month of May, while weekly jobless claims dropped by 1,000 to 267,000.
Valeria Bednarik, Chief Analyst at FXStreet notes, "The EUR/USD pair 1 hour chart shows that the price is now below its 20 SMA, whilst the technical indicators head modestly lower below their mid-lines, indicating an increasing downward potential. In the 4 hours chart, the 20 SMA heads north below the current level, providing an immediate support in the 1.1160 region, whilst the technical indicators have retreated modestly within positive territory. A stronger decline below 1.1160 could see the pair down to 1.1120, although further declines are unlikely ahead of US employment data this Friday. "
"Support levels: 1.1160 1.1120 1.1090
Resistance levels: 1.1200 1.1235 1.1280"