EUR/USD Reverses Daily Gains After ECB, Targets YTD Low
The EUR/USD reversed early gains and turned negative for the day following the European Central Bank decision on monetary policy.
The ECB left rates unchanged, as widely anticipated, and ratified that its Asset Purchase Programme (APP) will end in the third quarter, saying that the calibration of net purchases for the third quarter will be data-dependent and reflect the Governing Council’s evolving assessment of the outlook.
At a press conference, ECB President Christine Lagarde noted that risk to inflation outlook is tilted to the upside in the near term having intensified lately.
The euro weakened as the knee-jerk reaction as investors were expecting a more hawkish approach from the central bank. The EUR/USD fell back below the 1.0900 mark and hit a daily low of 1.0826, losing nearly 100 pips from the daily high set at 1.0923.
Meanwhile, the U.S. released retail sales data, which showed a merely 0.5% increase in March, slightly below the 0.6% forecasted, while initial jobless claims rose to 185,000 last week, above the 171,000 expected.
From a technical perspective, the EUR/USD holds a bearish short-term bias as shown by indicators in the daily chart. The MACD remains in negative territory, while the RSI is gaining downward slope, showing increasing selling pressure.
At the same time, the price holds well below its main moving averages, with the 20-day SMA offering immediate resistance at the 1.0965 zone. A test of the YTD lows at 1.0805 is still on the cards, while a break below this level would expose April’s 2020 low of 1.0727 and eventually 1.0700.
On the other hand, if the EUR/USD manages to regain the 20-day SMA, next resistances are seen at the 1.1000 psychological level and the 1.1070 zone, ahead of the critical 1.1150 23.6% Fib retracement of the May 2021 - March 2022 fall. A recovery above this latter should alleviate the short-term bearish pressure.
The ECB left rates unchanged, as widely anticipated, and ratified that its Asset Purchase Programme (APP) will end in the third quarter, saying that the calibration of net purchases for the third quarter will be data-dependent and reflect the Governing Council’s evolving assessment of the outlook.
At a press conference, ECB President Christine Lagarde noted that risk to inflation outlook is tilted to the upside in the near term having intensified lately.
The euro weakened as the knee-jerk reaction as investors were expecting a more hawkish approach from the central bank. The EUR/USD fell back below the 1.0900 mark and hit a daily low of 1.0826, losing nearly 100 pips from the daily high set at 1.0923.
Meanwhile, the U.S. released retail sales data, which showed a merely 0.5% increase in March, slightly below the 0.6% forecasted, while initial jobless claims rose to 185,000 last week, above the 171,000 expected.
From a technical perspective, the EUR/USD holds a bearish short-term bias as shown by indicators in the daily chart. The MACD remains in negative territory, while the RSI is gaining downward slope, showing increasing selling pressure.
At the same time, the price holds well below its main moving averages, with the 20-day SMA offering immediate resistance at the 1.0965 zone. A test of the YTD lows at 1.0805 is still on the cards, while a break below this level would expose April’s 2020 low of 1.0727 and eventually 1.0700.
On the other hand, if the EUR/USD manages to regain the 20-day SMA, next resistances are seen at the 1.1000 psychological level and the 1.1070 zone, ahead of the critical 1.1150 23.6% Fib retracement of the May 2021 - March 2022 fall. A recovery above this latter should alleviate the short-term bearish pressure.