EUR/USD: Further downside in play ahead of ECB’s Draghi?

The EUR/USD pair extended its downside consolidation phase into Asia this Wednesday, as the bears take a breather ahead of the ECB President Draghi’s speech and Euro area flash manufacturing PMIs due later today.

EUR/USD: A test of 1.17 handle likely on Draghi’s speech

The spot is seen moving back and forth in a 20-pips narrow range, having found support just below the mid-point of 1.17 handle, as the USD bulls appear to face exhaustion after yesterday’s massive pullback from six-day troughs.

The EUR/USD pair ran into resistances once again near 1.1830 levels a day before, and from there plummeted 80-pips amid broad based US dollar strength, inspired by higher Treasury yields as risk sentiment improved.

Moreover, downbeat German ZEW surveys poured cold water on expectations that the German economy is on a progressive growth trajectory, widening the US-Germany 10-year yields spread in the favor of the US dollar.

In the day ahead, the Euro remains exposed to further downside risks and could test 1.17 handle against its American counterpart, as the ECB’s Draghi’s speech may not offer any hawkish hints on the monetary policy, in the wake of the recent EUR rally.

Also, the Euro area flash manufacturing PMI releases could fail to provide the much-needed respite to the bulls, opening doors for further downside.

Forex Daily Outlook: What you need to know for Wednesday

EUR/USD Technical Set-up  

Valeria Bednarik, Chief Analyst at FXStreet noted: “The immediate support is the weekly low, at 1.1730, with a more relevant one in the 1.1680/90 region. Below this last, the pair can gain bearish momentum and extend its monthly decline beyond the current low of 1.1661. Strong selling interest is capping advances in the 1.1820/30 price zone, so it will take a break beyond 1.1860 to see the pair gaining bullish traction. Support levels: 1.1730 1.1685 1.1650 Resistance levels: 1.1825 1.1860 1.1910.”