In a sharp drop the EUR/USD pierced the support of the 1.1200 level on Tuesday. The move was caused by two events.
The President of the European Central Bank confirmed in a speech that the money creation schemes done in the Eurozone will continue. Namely, there will be more Euro in circulation.
Moreover, the decline was strengthened by bad sentiment data from Germany. The German ZEW Economic Sentiment survey results were almost four times worse than already expected.
The European Common Currency depreciated against the US Dollar, following the US Retail Sales data release on Friday at 12:30 GMT. The EUR/USD exchange currency rate lost 19 pips or 0.17% right after the release. The Euro continued trading at the 1.1235 level against the Greenback.
Census Bureau released the US Retail Sales data, which came out worse-than-expected of 0.5% compared with forecast 0.7%.
According to the official release: "Retail trade sales were up 0.5 percent (±0.5 percent)* from April 2019, and 3.1 percent (±0.7 percent) above last year. Nonstore retailers were up 11.4 percent (±1.4 percent) from May 2018, while sporting goods, hobby, musical instrument, and book stores were down 4.2 percent (±2.5 percent) from last year."
Last Draghi's speech incoming
This week a central bank forum is taking place in Sintra. Speeches happen each day until Thursday.
Namely, Draghi spoke at 17:00 GMT on Monday, 08:00 GMT on Tuesday and is still set to speak at 14:00 GMT on Wednesday.
The first speech had the opening remarks. Second one caused the drop on Tuesday, and the third one will be the closing remarks.
Bank of England Governor Mark Carney will speak at 14:00 GMT on Tuesday.
In the meantime, this week various central banks will make monetary announcements.
On Wednesday, at 18:00 GMT the Federal Reserve is making its FOMC Statement, Federal Funds Rate and Economic Projections. Afterwards, at 18:30 GMT the FOMC Press Conference will take place.
On Thursday, Bank of England will make a Rate Statement, Monetary Policy Summary and MPC Official Bank Rate Votes.
Moreover, also on Thursday, the Bank of Japan will make a Monetary Policy Statement and host a Press Conference. However, the time has not been set. Bank of Japan does not set an exact time for their monetary policy events.
In addition, this week there will be notable macroeconomic data releases occurring.
On Wednesday, the UK CPI will be published at 08:30 GMT, and at 12:30 GMT the Canadian CPI will be out. The UK event can cause a move of up to 20 pips, and the Canadian CPI on average has caused moves of 40 base points.
On Thursday, UK Retail Sales will be out at 08:30 GMT. Although, the rate is not expected to cause a big move because the event will happen just before the Bank of England event.
On Friday morning, the European PMIs will get released. Most important of the PMIs will be the German data at 07:30 GMT.
The week will end with the Canadian Retail Sales and Core Retail Sales at 12:30 GMT.
EUR/USD hourly chart's review
Yesterday, the EUR/USD currency pair tried to surpass the resistance level formed by the 55-hour SMA. During Tuesday's morning, the pair dropped to support level—the monthly PP at 1.1181.If the given support level holds, it is expected, that a reversal north could occur in the nearest future. Note, that the exchange rate has to surpass the Fibonacci 38.20% retracement at 1.1200. Also, it is unlikely, that the Euro could exceed the 1.1230 mark due to the given moving average.
If the given support does not hold, it is likely, that the rate could continue to sharp losses. In this case, the pair could decline to the support level formed by the weekly S1 at the 1.1162 mark.
Hourly Chart
On the daily candle chart one can observe that at the 1.1200 level a 61.80% Fibonacci retracement level is located at.
Meanwhile, the 55 and 100-day simple moving averages were actively providing resistance and support during the past weeks. They were located at 1.1223 and 1.1270.
Daily chart
On Monday, traders were short on the EUR/USD. Namely, on the Swiss Foreign Exchange of all the open position volume 72% was in short positions.
By the middle of Tuesday's London trading 73% of volume was in short positions.
Meanwhile, trader set up pending orders in 100-pip range around the pair had become neutral, as they were balance. 50% were set to sell and 50% were set to buy.
Previously, the pending orders were short, as 59% of orders were to sell.