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EUR/USD  rallies back to the pre-ECB trading range. So far, it hasn’t moved above  resistance at 1.3650, but we could certainly see it make another attempt. Perhaps this will wait for after the Non-Farm Payrolls, no matter the actual outcome.

The reason for the rally is a  critical change in the ECB’s forward guidance, which counters the historic announcement of a negative deposit rate and a wide array of measures that the central bank announced. What’s next for the pair?

Here is how price action looks: quite a yo-yo:

EURUSD June 5 2014 technical 30 minute chart for the Draghi show forward guidance backfires

The pair traded around 1.36 before the announcement of negative rates. It then fell below support at 1.3585 to lower support at 1.3560. The announcement of additional steps by Draghi (TLTRO, no sterilization of the SMP and even preparation for QE)  sent it to almost 1.35, which is a round number, albeit not strong support as 1.3475 is.

When Draghi clarified that no more rate cuts are on the cards, the pair began recovering but was capped by the separator of 1.3585. After the dust settled, it continued rallying, temporarily attacking 1.3650 before  moving back to the pivotal line of 1.3615.

All in all, the 1.3585 to 1.3650 range could prevail for now. The next resistance line is 1.37, followed by 1.3740. For more lines, events and analysis, see the EUR USD prediction.