The EUR/USD fell every day this past week despite generally healthy data. Although part of this could be attributed to the rise in the U.S. dollar, the single currency is also pressured by Germany’s political troubles and a dovish central bank. The last time the ECB met, they cut their asset purchase program but said rates would remain at current levels well past end of QE, which means October 2018. Despite improvements in the labor market, manufacturing and service sector activity, we don’t expect the central bank to change their views and a reminder of their dovish stance could extend the slide in EUR/USD below 1.17, or have little impact on the currency. Either way, we don’t expect the euro to rally on the back of the rate decision.

Technically, the weekly charts show that the next level of support for EUR/USD below 1.1750 is 1.1660 followed by the November low of 1.1550. If EUR/USD rises back above the 20-week SMA, then its probably headed back to 1.19