EUR/USD hits fresh lows under 1.1700, remains under pressure

Following the ECB decision and Draghi’s press conference the euro dropped further in the market and sent EUR/USD to a fresh 2-week low at 1.1686. 

ECB, Draghi and USD 

The euro fell sharply after the taper announcement from the ECB. The decision was in line with expectations but market participants considered the message as tilted to the dovish side. The decision was not unanimous as a minority of the members wanted to put a precise end date. Despite the optimism from Draghi, the euro weakened. 

After Draghi, news coming from the US pushed US bond yields off lows and offered support to the greenback. The House of Representatives passed a budget blueprint, clearing the way for tax cuts. The 10-year yield rose back to 2.44% after falling earlier to 2.40%. 

Meanwhile, the crisis in Spain continues after Catalonia’s leader ruled out snap elections, prolonging the standoff with the national government. During his press conference, Draghi said that they are watching closely the crisis. 

EUR/USD bearish momentum intensifies 

The pair is holding near the lows with a clear bearish momentum after breaking below the lows of the previous two weeks. A test of October lows at 1.1665/70 appears likely for the coming session from a technical perspective. According to analysts from Brown Brothers Harriman, a close below yesterday's low (1.1750) would be seen as a bearish development.  

In order to remove the short-term pressure, EUR/USD needs to rise back on top of 1.1740. Above resistance levels might be located at 1.1795 (Oct 24 high) and 1.1835 (Oct 25 high).