EUR/USD falls to a session low of 1.1330, lowest since 3 January
Price is now slipping just below the support region around 1.1338-46 as markets are anticipating a more dovish take by the ECB and Draghi later today. The weak PMI prints earlier is only helping to reinforce expectations that the ECB should at the very least acknowledge the economic slowdown in the region and possibly put out a more dovish communique compared to what we saw in December.
Considering how much markets are expecting the central bank to be dovish, the bar is set really low for a rebound in the euro to take place later - as mentioned earlier here. A further move towards 1.1300 ahead of the events later would only mean that markets are pricing in a more dovish take and any disappointment will just see the euro gather some momentum back to the upside (though that's unlikely to go far either).
I still expect the ECB to only change its rate guidance and communicate a more dovish message on the economic outlook in March but there is still some scope for the central bank to be a little dovish later. That said, I don't see much changes to the communique in December and as what Draghi mentioned last week i.e. the economy is experiencing a slowdown but is not heading towards a recession.
As for EUR/USD, that should keep the pair just above the 1.1300 handle but any rally back towards 1.1400 shouldn't be a given either.