EUR/USD drops to fresh low near 1.0740 on ECB headlines

The EUR/USD came under renewed selling pressure amid headlines suggesting that the ECB's message at its March 9 meeting has been overinterpreted by the markets as a step to exit. The pair quickly fell to 1.0740, where it renewed the weekly low and made a weak correction afterward. As of writing, the EUR/USD is down 0.45% at 1.0765.

ECB's message

Reuters, in a recent report, said that one ECB source expressed that what they wanted to communicate in March was reduced tail risks, but now they are worried about a potential yield surge due to overinterpretation by the markets. Following the report, the probability of a December rate hike by the ECB as priced by money markets slipped to 50% from 70%.

Euro under heavy pressure on ECB headlines

Brexit

On a separate note, the Brexit process, which officially started with European Council President Donald Tusk receiving a letter from the British ambassador today, doesn't look like it's going to be smooth as a leaked copy of the European Parliament's resolution showed that there won't be any free trade arrangements in the next two years.

European parliament: No free trade agreement with Britain in next two years - The Guardian

Technical outlook

A break below 1.0710 (Fib. 38.2% - Nov/Jan fall) could aim for 1.0670 (50-DMA) and 1.0630 (100-DMA). On the upside, the first technical hurdle aligns at aligns at 1.08 (psychological level) followed by 1.0845 (200-DMA) and 1.0905 (Mar. 27 high).