HFM information and reviews
HFM
96%
Octa information and reviews
Octa
94%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
Vantage information and reviews
Vantage
85%

EUR/GBP pressure grows ahead of ECB


21 April 2016

The outcome of the European Central Bank’s latest policy decision is due on Thursday. Having just expanded QE at the last meeting in March, the ECB is unlikely to alter its policy further at this meeting. Investors will therefore focus on Mario Draghi’s comments, in particular for any hints on cutting the deposit rate further into negative territory in the future, something the ECB head had suggested would not happen. If there is a U-turn in this regard, then the euro could come under renewed pressure.

In fact, the euro has already weakened in recent days, most notably against the pound which has rallied despite the on-going Brexit concerns. Today, the pound was able to hold its own relatively well even though the latest jobs data from the UK disappointed expectations. Here, unemployment rose for the first time in seven months, applications for jobless claims showed a surprise of 6,700 and the three-month average rise in wages including bonuses of 1.8% was below expectations. However, it wasn’t all doom and gloom as wages excluding bonuses rose by a better-than-expected 2.2% and the unemployment rate remained unchanged at 5.1% as had been expected. The EUR/GBP nonetheless weakened. The cross will remain in focus for the remainder of this week because of the ECB’s meeting tomorrow and more economic data from both the UK and the Eurozone: UK retail sales are due tomorrow morning while the latest manufacturing PMI figures from the Eurozone are due for publication on Friday.

As mentioned, the EUR/GBP has continued to retreat after forming its first bearish weekly candlestick pattern in six last week at major long-term resistance zone between 0.8030 and 0.8100 (area shaded in red on the daily chart, below). As discussed previously, this area marks the convergence of several technical indicators, including the resistance trend of a long-term bearish channel, previous highs and several Fibonacci levels.

At the start of this week, the EUR/GBP has formed a couple more bearish patterns. On the daily chart, one can see a clear inside bar failure on Monday: price momentarily broke above the 0.7980 resistance level, trapped the bulls, before heading decisively lower to form an inverted hammer candlestick formation. On Tuesday, there was some further follow-through in the selling pressure, which helped to erode the bullish trend line. Today, the EUR/GBP has closed the gap on the flattening 50-day moving average at 0.7860. The gap between the 50- and 200-day moving averages may soon shrink if price falls further.

Below the 50-day average, the next immediate potential support levels or bearish targets to watch are as follows:

0.7830: 61.8% Fibonacci retracement level from the  most recent low at 0.7650/5 area
0.7750/5: 78.6% Fibonacci retracement of the above price swing and previous support/resistance level
0.7680/5: 38.2% Fibonacci retracement of the entire rally from the November 2015 low.

The bearish outlook on the EUR/GBP will become invalid should price form a decisive bullish pattern, or rally back above the broken 0.7930 support-turned-resistance level. Until and unless that happens, the path of least resistance for the EUR/GBP remains to the downside. Meanwhile the momentum indicator RSI is still some way off the “oversold” level of 30, suggesting that further weakness could be seen over the next several days.

Share: Tweet this or Share on Facebook


Related

EURJPY flirts with 18-month peak of 126.83

EURJPY recorded a stunning rally towards an 18-month high of 126.83 after finding strong support at the 20-day simple moving average (SMA) and the rising trend...

1 Sep 2020

EUR/GBP below monthly trendline

EUR/GBP stays directionless despite bouncing off six-month lows. Prices remain clubbed between the low of Monday's Doji and 0.8600/05 resistance...

22 Nov 2019

EUR/GBP Ichimoku clouds; USD/CAD to fall

Over the past two weeks, there has been a fall in oil quotes which weakened the Canadian dollar and the USD/CAD pair is seen as flat with the range of 100 points: between the levels of 1.3410 and 1.3510...

12 Jun 2017

The race of EUR and GBP

While a glimpse at EURGBP would not reveal much, both these currencies are now racing which one beats the US dollar more...

8 Dec 2016

Second round for EUR/GBP

The EUR/GBP pair plunged again below the resistance level of 0.8628, which also serves as an upper part of the range in the daily chart...

29 Sep 2016

EUR/GBP is ready to drop!

A bullish trap has formed on the daily chart and the currency pair approached it with a shooting star formation. The first chance you get to sell the pair at the currency price (0.8600) is...

22 Sep 2016


MultiBank Group information and reviews
MultiBank Group
84%
XM information and reviews
XM
82%
FP Markets information and reviews
FP Markets
81%
FXTM information and reviews
FXTM
80%
AMarkets information and reviews
AMarkets
79%
BlackBull information and reviews
BlackBull
78%

© 2006-2024 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.