Forex: EUR/USD squeezed back to 1.2850

FXstreet.com (Barcelona) - In reaction to ECB Draghi’s press conference, the EUR/USD fell from 1.2836 to 1.2757, a fresh 2013 low. But the market considered that the EUR was too cheap compared to the greenback and bids brought it back to the opening price at 1.2848, erasing all daily losses and attempting to move higher now. Behind such recovery was Draghi’s forceful defense of Open Market Transactions and his dismissal of redenomination risk set off a serious squeeze, according to FXbriefs.com analyst Jamie Coleman.

ECB’s Draghi left the door open to policy easing but was vague about what kind of action to take. Mario Draghi reminded that the ECB cannot fight the crisis on its own and that EU Member States should carry on with structural reforms in order to stimulate competitiveness and growth and reduce deficits. Also, he said that the bail-in to Cyprus will not be used as a template for other Eurozone countries.

“Negative tone dominates on the 1h/4h studies and supports the scenario of further slide and retest of 1.2750 base, while corrective rallies stay capped under 1.2850. Key upside barrier lies at 1.2875, also 200 day MA”, wrote Windsor Brokers analyst Slobodan Drvenica.