Technical Bias: Bullish
Key Takeaways
• Euro likely completed a short-term correction against the British pound.
• 0.7915 is a major resistance and a breakout area for the EURGBP pair.
• EURGBP support seen at 0.7900 and resistance ahead at 0.7915-20.
The Euro after climbing as high as 0.7935 against the British pound moved lower, which can be seen as a part of the correction. It is likely that the EURGBP pair might trade higher again in the coming sessions.
Technical Analysis
There is a descending channel formed on the hourly chart for the EURGBP pair. Currently, the pair is nudging the channel resistance trend line and struggling to pierce the same. Recently, the pair declined from the 0.7935 high to test and bounce from the 50% Fibonacci retracement level of the last move higher from the 0.7870 low to 0.7935 high. So, this particular bounce came from a solid technical level, which increase the possibility of a move higher in the short term. One important point to note here is that the pair is trading above the 100 and 200 hourly simple moving averages. So, it is likely that the pair might break the channel resistance zone and trade higher towards the last high of 0.7935. There is even a chance that the pair might break the last high to challenge the 0.7960 resistance level.
Alternatively, if the pair fails to break the channel resistance area, and moves lower, then a test of the 50% fib level might be possible. However, the channel support trend line is a bit lower and just above the 61.8% fib level, which is likely to act as a barrier for the Euro sellers.
German Import Price Index And Spanish Retail Sales
There are a couple of economic releases lined up later during the London session, including the German Import Price Index and Spanish Retail Sales. These events can cause a break in the EURGBP pair if outcome stays in line the expectations.
