Draghi: Dovish Comments Sends EURUSD below 1.12

In a speech in Sintra, Portugal the ECB head Mario Draghi left the doors open to more interest rate cuts. The comments send the EURUSD lower below the 1.12 mark to two week low. Eurozone economic data was a big disappointment in 2Q 2019 and now ECB fears that with the trade war escalation the situation might get worse for the old continent. Interest rates in EU were expected to remain at current levels at least through H1 2020, but now markets have to evaluate Mr. Draghi’s comments.

Just to make things worst in its latest economic forecasts for summer 2019, the German Ifo institute on Tuesday cut the 2020 growth forecast for the German economy to 1.7% vs. 1.8% previously. Germany ZEW Survey – Current Situation came in at 7.8, above forecasts (6) in June, but the Economic Sentiment registered at -21.1, below expectations (-5.9) in June, falling to its weakest level since November last year.

After the news EURUSD broke below the 50 day moving average which provided support during the Asian and European session, and also breached the 1.12 level. Now bears are in control and a test of 1.1170 area looks possible. On the upside only a break above the daily high at 1.1242 can give bulls the upper hand.