EUR continues to be weighed down by Draghi’s dovish tone. A modest USD recovery adds to the downward pressure. Follow-through selling might open room for additional weakness.
The EUR/USD pair extended its steady decline from an intraday high level of 1.2384 and has now dropped to fresh session lows.
The pair extended its overnight retracement slide from multi-day tops, triggered by the ECB President Mario Draghi's dovish tone, and drifted into negative territory for the second consecutive session.
This coupled with a modest US Dollar rebound, despite lingering growing global trade war fears, kept exerting some additional downward pressure and dragged the pair to mid-1.2300s.
The pair, however, seems to be finding some support near a short-term ascending trend-line, extending from monthly lows. Hence, it would prudent to wait for a decisive break below the mentioned support before positioning for any additional near-term depreciating move.
On the economic data front, the release of regional manufacturing indices and the usual weekly jobless claims from the US would now be looked upon for some fresh trading impetus during the early NA session.
Technical levels to watch
A convincing break below mid-1.2300s is likely to accelerate the fall towards the 1.2300 handle en-route 1.2275 horizontal support. On the upside, the 1.2400 area might continue to act as an immediate hurdle, which if cleared decisively might trigger a short-covering bounce and assist the pair to aim back towards reclaiming the key 1.25 psychological mark.