The euro fell over 0.4% against the dollar and traded lower for a fourth consecutive day following ECB President Draghi’s dovish comments in Parliament. He reiterated that economic outlook are improving with downside risks moderating and that he is firmly convinced that euro zone still needs policy support.
The euro has had a bullish tone following the French election results as concerns ease over a rise of populist and anti-euro politicians. The strong euro was also supported by speculation that the ECB might become more hawkish at its June meeting.
Price action on the EUR/USD daily chart shows that euro has been making higher highs and higher lows since bottoming out at the 1.0339 level. Critical resistance remains the 1.13 level and price is still respecting the ABCD pattern that formed on May 23rd. Point D was confirmed with the 200.0% Fibonacci expansion level of the B to C move. If the reversal continues, key support will come from the 1.10 handle. Major support will lie at the 200-day SMA. To the upside, resistance remains the psychological 1.13 level, followed by 1.1500.The trade: Buy EUR/USD at 1.1035 with a stop loss at 1.0935 and a take profit at 1.1335. The Risk/Reward Ratio is 1:3