EUR/USD: worst day in a month after ECB, tests 1.2300

• Euro reversed sharply after Draghi’s press conference. 
• Bearish momentum for EUR/USD continued during US session. 
• After ECB, now Trump and then NFP. 

EUR/USD extended the decline during the last hours and printed a fresh daily low at 1.2303. What started as a profit-taking correction turned more dramatically and now the pair has fallen below the 20-day moving average. The euro is having the worst performance against the US Dollar in a month. 

The combination of a reversal in the euro after ECB events and a rebound of the US dollar pushed EUR/USD sharply to the downside. Easing fears about the trade war supported the greenback. The decision of US President Trump regarding tariffs is awaited any moment. The next key event afterward will be the release of the official jobs report on Friday. 

Regarding the euro, the European Central Bank as expected left interest rates unchanged and also the QE program. It removed an explicit easing bias, another action that was mostly priced in. Initially, EUR/USD jumped to 1.2445, on expectations and Draghi’s economic optimism but then reversed sharply, erasing all gains. 

Levels to watch 

The retreat of EUR/USD is taking place from near a key long-term resistance (downtrend line from 2008). The short-term momentum now favors the downside, particularly with price back under the 20-day moving average (1.2330). 

The pair bottomed today at 1.2303, more than a hundred pips below day’s high. The 1.2300 area is the immediate support and below the strong 1.2280 area and 1.2250. To the upside, resistances lie at 1.2355, 1.2385 and 1.2400.