The overnight retreat from post-ECB rally stalled at 1.1170 in early trades, with the bulls fighting back control, now sending EUR/USD back above 1.12 barrier.
EUR/USD higher on negative Asian equities
Currently, EUR/USD trades 0.22% higher near fresh session highs of 1.1210 reached last minutes, and now looks to test post-ECB highs at 1.1218. The main currency pair is finally seen breaking higher from the overnight consolidation phase as dust settles over ECB aftermath.
The major experienced an extremely volatile session following the ECB event, initially plunging nearly 170 pips after the central bank aggressively unveiled more stimulus than what markets had expected. While the Draghi’s presser triggered a quick 400 pips reversal rally from 1.0823 lows, with EUR/USD printed fresh three-week highs at 1.1218.
Draghi’s magical words offered much needed respite to the EUR bulls as he stated that the ECB cannot cut rates as low as they want and squashed expectations over negative interest rates policy likely to be adopted by the central bank going forward.
The ECB at its policy decision yesterday, slashed all three main rates: refi rate to 0.00% from 0.50%, depo rate to -0.40% from -0.30% and marginal lending facility to 0.25% from 0.30%. Besides, ECB expanded the QE program by €20 billion to €80 billion a month, starting in April and included investment grade euro-denominated bonds issued by non-bank corporations established in the euro area into QE.
Looking ahead, in absence of significant macro data today, markets will continue absorb the ECB new bazooka and await the FOMC decision next week for next direction on the major.
EUR/USD Technical Levels
In terms of technicals, the pair finds the immediate resistance at 1.1218 (three-week high). A break beyond the last, doors will open for a test of 1.1250/53 (Feb 15 High). On the flip side, the immediate support is placed at 1.1180 (1h 5 & 10-SMA) below which at 1.1150 (psychological levels) could be tested.
(Market News Provided by FXstreet)