EUR/USD bounces off ECB news-led swing lows to 1.1200 neighborhood

The ECB news-led intense selling pressure around the shared currency seems to have abated, with the EUR/USD pair bouncing off over 305-pips from swing lows to 1.1200 neighborhood. 

Talks of ECB cutting its inflation forecast through 2019 on weaker energy prices faded expectations for tapering in the near-term and weighed heavily on the common currency. This coupled with strong greenback recovery dragged the pair to fresh weekly lows near the 1.1200 handle. 

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Meanwhile, lack of any strong follow through up-move in the US treasury bond yields failed to provide any additional boost to the US Dollar recovery move and helped the pair to recover some of its sharp losses posted during mid-European session.

The pair, however, maintained its offered tone around 1.1235 level and now seems to have confirmed a strong supply zone at yearly tops near 1.1280-85 region.

Investors now look forward to Thursday's key event risks - ECB monetary policy decision and former FBI Director James Comey's testimony before the Senate, which would help determine the next leg of directional move for the major.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet writes: "Short term, the pair is modestly bearish, as in the 4 hours chart, the price broke below its 20 SMA, but is so far holding above a bullish 100 SMA, this last at 1.1200, whilst technical indicators have managed to pared loses near oversold territory. Demand for the greenback remains subdue, albeit below 1.1200, the pair has scope to extend its slide towards 1.1160."