EUR/USD drops further below 1.1800, erases most of post-Fed gains

• EUR/USD back near pre-Fed levels, after falling 90 pips from day’s high. 
• ECB positive growth outlook offset by Draghi and US data 

The EUR/USD pair continued to retreat from weekly highs and is back near the level it had before yesterday’s Fed decision. 

Back below 1.1800 after Draghi and US data 

Yesterday the tone and the projections from the Fed weakened the US dollar across the board. EUR/USD climbed above 1.1800. Today the pair continued to rise and peaked at 1.1860 after the European Central Bank presented its growth and inflation outlook. The positive revision to GDP growth boosted the euro. 

Afterward, the common currency lost strength and pulled back, erasing all ECB-gains. The slide from the highs accelerated below 1.1800 and recently it bottomed at 1.1769. It was trading at 1.1775/80, down 45 pips for the day. 

US economic data and some comments from Draghi removed momentum from the pair. ECB President reiterated that downside risks for inflation might come from foreign exchange movements. While in the data front, US retail sales and weekly jobless claims showed better-than-expected numbers. The PMI report for December pointed to divergent trends: slowdown in services growth and acceleration in manufacturing output. 

Technical levels to watch

To the downside 1.1770 was the immediate support, followed by 1.1750 and 1.1730 (Dec 8 & 13 low). On the flip side, resistance levels were seen at 1.1810 (20-hour moving average), 1.1845 and 1.1862 (Dec 14 high).