The EUR/USD pair nosedived to two-week lows following the dovish ECB statement on Thursday. The price has challenged fresh lows in the 1.1543 area earlier today but faced support and since has recovered some ground. During the early European hours, the euro is attempting to get back above the 1.16 threshold.
Despite the pair has stopped bleeding, the euro remains vulnerable as the dovish outlook for rates in the euro zone reduces the appeal of the currency. By the way, following yesterday’s central bank rhetoric, Deutsche Bank pushed back its ECB rate hike forecast to September 2019. This contrasts with the bold tone by the Fed as the regulator now expects for hikes this year instead of three.
Against this background, the EUR/USD outlook looks more bearish now, and should the incoming euro area and US economic data continue to diverge, the price could deepen its bearish trend, while rallies will likely attract sellers. In the short term, the pair needs to regain the 1.16 mark at least, though it won’t change the overall bearish picture significantly for the time being. The immediate important resistance now comes around 1.17, where the 20-DMA lies.