EUR/USD fades Draghi-led spike to 1.1265 as focus shifts to Yellen

The Euro rallied hard across the board, following the ECB Chief Draghi’s speech, driving the EUR/USD pair sharply higher to print fresh multi-day tops of 1.1265, before easing back towards the mid-point of 1.12 handle, as attention turns towards the next big risk event for the spot, Fed Chair Yellen’s speech.

The ECB President Mario Draghi, said in his prepared remarks at the central banking forum in Portugal, the effects that keep inflation subdued are not durable and self-sustaining, adding that  “the threat of deflation is gone and reflationary forces are back in play.” Draghi also hinted at stimulus withdrawal amid a broadening economic recovery across the Euro area.

With the ECB Chief Draghi’s speech out of the way, Fed Chiar Yellen’s speech remains in limelight and hence, the greenback stalled its downslide and recovers ground broadly, as monetary policy divergence continues to favor the buck. The USD index bounced-off 9-day lows of nearly two-week lows of 96.58 to now trade at 96.70 levels.

EUR/USD Technical Levels

According to Raffi Boyadjian, Investment Analyst at XM: “If the positive momentum is sustained, the next key resistance will likely come from the area between 1.1280 and 1.13, which has been a difficult area to breach in the past. A successful break above 1.13 would likely bring the 1.1350 level in focus. Should prices reverse lower however, support could come the 1.1150 level, which has been a previous support and resistance area. Further down, the one-month low of 1.1118 from June 20 would be eyed as another support point, followed by the 50-day moving average at 1.1075.”