EUR/USD: bears in control after ECB

• On Thursday, EUR/USD logged its biggest single-day drop since Jan. 2.  
• The slide likely indicates that Draghi was more dovish than expected.  
• The pair risks falling below 1.12, having cleared key trendline support yesterday.  

Dovish Draghi has likely put the EUR/USD pair on the path to a sustained break below 1.12.  

On Thursday, the European Central Bank (ECB) kept key rates and  forward guidance unchanged but downgraded its assessment by stating that the balance of risks has moved to the downside.  

It is worth noting that expectations of ECB rate hike were pushed back to mid-2020 three weeks ago. Further, EUR/USD shed more than 200 pips in the last 2.5-weeks. Put simply, ECB’s dovish turn was likely priced in.  

Still, the EUR dropped post-ECB. Moreover, ECB’s decision to revise downward its assessment of risks may  have triggered expectations of a change in the forward guidance wording at the next meeting on 07 March.  

The EUR, therefore, could soon find acceptance below 1.12. Validating that argument is the daily chart, which shows the pair closed yesterday below the support of the trendline connecting the Nov. 13 and Dec. 14 lows.  

As of writing, the EUR/USD pair is trading at 1.1320.

EUR/USD Technical Levels