EUR/USD bearish bias intact: holds at 3-month lows under 1.1600

• EUR weak as tensions escalate in Spain after Catalunia Parliament voted for independence 
• Spot remains at lows despite USD pullback
• Worst 2-day slide in more than a year 

The pressure around the euro intensified during the last hours after Catalan lawmakers declared the region’s independence while the Spanish Senate granted the government to take direct control of the region. The euro was already moving with a bearish bias after yesterday’s ECB meeting. 

Catalonia, ECB, technicals... too much for EUR 

EUR/USD pulled back quickly back under 1.1600 and remains at daily lows. The pair spiked to 1.1625 after specialized media informed that US President Trump was leaning toward Powell as next Fed chief. But the rebound was short-lived. 

The bearish pressure around the euro persists as it trades at lows across the board. EUR/USD bottomed at 1.1573, the lowest since July 19. During the last hours, it has remained steady hovering around 1.1580, consolidating significant losses. 

The slide started yesterday after the ECB meeting. The “dovish” tapper triggered a decline of the pair that later accelerated with the break of key support levels at 1.1725 and at 1.1680. Meanwhile, the greenback remained resilient. The Dollar Index reached today the highest level since July at 95.00 and is having so far the best week in months while the euro is posting the worst 2-day slide against the US dollar in more than a year. 

EUR/USD Technical outlook 

“The technical breakout of the 1.1660 level, which held the downside since early August, has put the pair in a bearish path, moreover with this weekly close below the 1.1600 level. The daily chart shows that the price has broken below its 20 and 100 DMAs with a large candle, which indicates strong selling interest, whilst technical indicators entered negative territory with the ECB, nearing now oversold readings with US GDP”, said Valeria Bednarik, Chief Analyst at FXStreet.

According to her, doors are open for an extension towards the 1.1460 region, a major long-term static resistance area between 2015 and 2017. “Some relief could come above the mentioned 1.1660, with scope then for an advance towards the 1.1820/30 region next week”, Bednarik concluded.