EUR/USD eases off yearly highs post Draghi

After reaching its highest level since June 23, 2016, at 1.1390, the EUR/USD started to consolidate its gains in the NA session after ECB President didn't offer any surprises in his remarks at the ECB Forum on Central Banking. As of writing, the pair is trading at 1.1360, up 20 pips, or 0.18% on the day.

Following yesterday's hawkish comments, investors were anxious to see what Draghi had to say today. However, Draghi failed to satisfy the market as he didn't comment on the inflation expectations nor the current state of the economy. 

• Draghi speech: 'Relatively confident' we will see improvement in productivity

Earlier in the session, a Bloomberg story claimed that according to an ECB source, yesterday's comments from Draghi were misjudged by the market as they were intended to be balanced. Furthermore, ECB's Vice President  Vitor Constancio also weighed in on the subject by saying that the comments were over-interpreted and the projected timeline greatly exaggerated. Although the EUR/USD pair quickly dropped below the 1.13 mark on these developments, it didn't find it difficult to recover as the greenback remained under pressure.

Today's dismal macro data from the U.S., which revealed that the Pending Home Sales contracted for the third month in a row in May as it came in at -0.8%, triggered a fresh USD selling wave, pushing the US Dollar Index to its lowest level since early October at 95.68. At the moment, the index is at 95.90, down 0.3% on the day.

• US: Pending home sales in May slump for the third consecutive month

Technical outlook

The RSI indicator on the 4-hour chart remains in the overbought territory, suggesting that the pair could struggle to build on its gains in the short-term. 1.1390 (daily high) could be seen as the initial hurdle for the pair ahead of 1.1450 (May 11 2016 high) and 1.1500 (psychological level). On the flip side, with a decisive break below 1.1300 (psychological level), the downward correction could extend towards 1.1205 (20-DMA) and 1.1140 (Jun. 22 low).

• EUR/USD: Break-out of multi-year 1.05-1.15 range to the topside? – Deutsche Bank