- Euro moves off lows across the board and US Dollar losses strength supporting EUR/USD recovery.
- The pair bottomed at 1.1229 and now it is back above 1.1250.
The EUR/USD dropped sharply after Draghi’s press conference hitting a 2-day low but during the last hours trimmed losses, rising back on top of 1.1250.
After ECB, US CPI before FOMC
The euro lost ground across the board and EUR/USD bottomed at 1.1228, the lowest level since early Monday. The slide took place during the post-meeting ECB press conference. Draghi’s words did not surprise. He mentioned that recession risks remain low. Regarding TLTRO said it is too early to discuss terms. The ECB is analyzing the impact of negative rates on bank profitability. “While the ECB tries to sound optimistic, it has started to prepare for the realization of the downside scenarios. We think further rate cuts remain in the tool box, and more bad data would now more easily spur the market pricing of such moves”, wrote Jan von Gerich, analyst at Nordea Markets.
Now markets await the FOMC minutes of its latest meeting that will be released at 18:00 GMT. It was a meeting tilted as “dovish” by analysts. The outcome could have an impact on the US Dollar but also it could be ignored it the minutes add no new information. Chairman Powell offered a press conference after that meeting.
In the preview of the minutes, Wall Street equity prices are in negative territory and the US Dollar is losing ground, reversing earlier gains. The weakness in the USD, favored the rebound in EUR/USD that is trading at1.1265, having erased most of the losses that followed the ECB meeting.
Levels to watch
The EUR/USD rose back above the relevant 1.1250 area removing part of the bearish pressure and sending the price back to the previous range between 1.1255 and 1.1285. A slide back under would leave the euro vulnerable to more losses. Support levels might be seen at 1.1205/10 and 1.1175. On the upside, the key level continues to be 1.1280/85; a break higher would signal a test of 1.1300 and the next resistance might lie at 1.1330 (Mar 25 high).
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