EUR/USD defends 100-DMA support, reverses early slide led by ECB's Draghi

The EUR/USD pair reversed a knee-jerk downward spike to 100-day SMA support and has recovered around 35-40 pips to currently trade around 1.0665 region. 

Earlier on Thursday, the pair tumbled to fresh 3-week low, near the 1.0630-25 support area, on dovish comment from the ECB President Mario Draghi, reiterating that inflationary pressure remains subdued and accommodative monetary policy remains appropriate. Draghi's dovish comments added to overnight bearish pressure surrounding the shared currency led by hawkish FOMC meeting minutes.

   •  ECB’s Draghi: Reassessment of current monetary policy stance not warranted at this stage

Spot, however, quickly reversed daily losses as traders seemed to readjust their positions ahead of the ECB Monetary Policy Meeting minutes. Also collaborating to the pair's recovery move was subdued US Dollar price action as traders look forward to the US economic docket, featuring the release of weekly jobless claims data along with the speech by San Francisco Fed President John Williams, for some fresh impetus.

Looking at the broader picture, the pair has been oscillating within 70-pips trading band since the beginning of this week and seems to await the release of the much awaited NFP data on Friday. Hence, it would be prudent to wait for a decisive break through this current trading range before committing to the pair’s next leg of directional move. 

Technical levels to watch

A follow through recovery beyond 1.0685 level (session high) now seems to lift the pair beyond the 1.0700 handle and accelerate the up-move towards 1.0730 horizontal resistance ahead of its next major hurdle near 1.0765 area. On the downside, 1.0630-25 region (100-day SMA) remains immediate strong support, which if broken decisively would turn the pair vulnerable to break below the 1.0600 handle and head towards testing 1.0560-55 support area.