EUR/USD dives to 1.1740 on ECB’s dovish taper, Draghi’s speech eyed

• ECB unveils APP reduction but extends until end-Sept 2018
• Looks to test the key support near 1.1730
• ‘Sell the fact’ on ECB decision

The EUR/USD pair witnessed aggressive selling pressure below a break of 1.18 handle and fell sharply to strike daily lows near 1.1740 levels, after the ECB the dovish looking taper.

At the time of writing, the spot is seen making minor recovery attempts near 1.1755 levels, as the bulls expect some respite from the ECB Chief Draghi’s speech at the 1230 GMT presser.

ECB announces QE taper, what next?

The Euro plummeted nearly 60-pips against its American counterpart after the ECB announced an extension to the QE program by another nine months, or beyond if necessary, alongside a cut in the bond-buying program by EUR 30 billion per month from the current monthly pace of EUR 60 billion.

The amount of QE reduction was already priced-in by the markets and hence, we could see the initial knee-jerk sell-off below 1.1800 levels. However, the dovish tilt in terms of the QE extension to Sept and leaving doors open for further extension is what disappointed the hawks, accentuating the sell-off in the major.

Meanwhile, the latest political developments surrounding the Spain – Catalonia deadlock is overlooked by the markets, as the main focus now remains on the ECB Chief Draghi’s speech due out shortly.

EUR/USD Technical View

Pablo Piovano, Analyst at FXStreet, explained: “The next support at 1.1725 (low Oct.23) seconded by 1.1686 (low Oct.6) and finally 1.1662 (low Aug.17). On the upside, a break above 1.1858 (high Oct.20) would target 1.1882 (high Oct.12) en route to 1.1911 (high Aug.2). In addition, FXStreet’s technical confluence indicator (TCI) notes important resistance area around 1.1860/70, where coincide pivot points and Fibo retracement.”