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Forex: EUR/USD volatile day ends with sharply lower close

FXstreet.com (Barcelona) - It was a volatile day for the EUR/USD, which opened the session at 1.3184 and at one point immediately after the ECB rate announcement traded as high as 1.3243. However, the pair was unable to sustain gains and quickly reversed downward during the course of Mario Draghi’s press conference, finishing the day 123 pips lower at 1.3061.

According to Sean Callow of Westpac Gloal Strategy, “The ECB dominated the headlines in London/NY, not so much with its 25bp rate cut but President Draghi’s “open mind” on negative deposit rates. EUR/USD had actually popped up from 1.3165 to 1.3210 on the rate cut (after a kneejerk flicker lower) then traded very nervously in the wait for the press conference.”
Furthermore, “EUR/USD tumbled from 1.3175 to around 1.3080 on Draghi’s indication that the ECB was seriously considering a negative depo rate. There was also some nervousness on wire sources claiming that some ECB members had argued for -50bp even as hawks made the case for no change. Press leaks of such division are rare. The NY low was 1.3037, steadying around 1.3060 in early Sydney.”

From a technical perspective, the large reversal candle is a negative development, and some view it as a sign of further developments to come. According to Chris Capre of 2nd Skies Forex, “For those thinking there is more downside (which I'm inclined to agree with), the next support comes in at 1.3000 and 1.2960. Bulls will minimally want to wait towards these levels before getting long, as long as the right price action forms there.”

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