EUR/USD drops to one-week low and recovers quickly on ECB headlines

The EUR/USD pair extended its sharp reversal from closer to yearly tops and touched a fresh one-week low level of 1.1370, albeit quickly recovered over 30-pips thereafter.

The pair came under some fresh selling pressure near mid-1.1400s and turned lower for second consecutive session amid a modest US Dollar recovery. 

The selling pressure got aggravated after ECB governing council member and Latvian central bank governor, Rimsevics was noted saying that ECB's QE program will continue for few more years. The pair, however, quickly recovered back to the 1.1400 handle after a news story in the WSJ reported that ECB could signal plans to wind down QE as early as its Sept. 7 meeting. 

   •  ECB: Shift in guidance coming? - Westpac

On the economic data front, the final print of German and French CPI figures went unnoticed and did little to provide any fresh impetus. Traders now look forward to the release of weekly jobless claims and PPI figures from the US for some short-term trading opportunities ahead of another testimony by the Fed Chair Janet Yellen and speeches from a couple of FOMC members. 

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet writes: "Below 1.1380, the next intraday supports come at 1.1345, a daily ascendant trend line, and the mentioned 1.1290 low. To the upside, only above 1.1460 the pair can recover its upward strength, with 1.1490 and 1.1525 being the next probable bullish targets."