In the aftermath of the Draghi caused drop the EUR/USD found support in a monthly pivot point at 1.1180 and retraced back to the 1.1200 level.
The 1.1200 level, where a 38.20% Fibonacci retracement level was located at, was providing resistance.
In general, the rate was expected to resume its decline as soon as the 55-hour SMA approaches from the above and provides additional technical resistance.
During Tuesday's morning, at 08:00 GMT, the European Common Currency depreciated 50 pips or 0.44% against the US Dollar. Note, that the Euro also depreciated against other major currencies.
The reason for the drop is the speech by the ECB President Mario Draghi. He attempted to reassure the market that the Bank is able to act amid increasing concerns on the real effect of the EU monetary policy in case a new recession occurs.
The US President Donald Trump criticized Mario Draghi's plans to cut interest rates, as it would weaken the euro and put the US at a competitive disadvantage.
In addition, following the German ZEW Economic Sentiment data release on Tuesday at 9:00 GMT, the EUR/USD exchange currency rate lost 8 pips or 0.08%. The Euro continued trading at the 1.1185 level against the Greenback.
ZEW released the German ZEW Economic Sentiment data, which came out worse-than-expected of negative 21.5 compared with forecast negative 5.7.
Watch out for the Federal Reserve
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 Friday morning, the European PMIs will get released. Most important of the PMIs will be the German data at 07:30 GMT.
EUR/USD hourly chart's review
On Wednesday morning, the EUR/USD was located at the resistance of the 1.1200 level. At that level a 38.20% Fibonacci retracement level was located at.In general, the rate was more expected to continue its decline, as it has been consolidating for some time after the recent sharp drop. In addition, the resistance of the 55 and 100-hour simple moving averages was approaching the rate from above.
On the other hand, the FOMC announcement might crash the technical chart, if the Fed does a rate cut. In that case the EUR/USD will surge up sharply.
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 providing resistance. They were located at 1.1222 and 1.1267.
Daily chart
On Wednesday, most traders were still short, as 71% of open position volume on the Swiss Foreign Exchange were in short positions. During Tuesday's London trading 73% of volume was in short positions.
It means that most had held their short positions. Due to that reason it can be assumed that traders have open profitable short EUR/USD positions.
Meanwhile, trader set up pending orders in 100-pip range around the pair were also bearish. 54% of all EUR/USD set up orders were to sell the pair.