Forex Technical Update
The EUR/GBP market was indeed focused on a recent high near 0.7960. However, the euro lost steam against the sterling at the 0.7955 level and started to trade in a short-term range. The support for this range is at about 0.79.
The market is probably consolidating ahead of the ECB and BoE meetings this Thursday (9/6). Which way will the market break?
A break to the downside opens up some pivots to the downside, 0.7884 in the near-term, then 0.7813 and 0.7755. This bearish outlook is in the direction of a bearish trend that started back in July 2011. A break above 0.7955, and then the 0.7960 resistance also breaks a trendline going back to October 2011, which exposes the declining trendline that goes back to July 2011. Price would probably meet this trendline above 0.81 but below 0.8155 highs from June 2012.
Risk Events: The central bank meetings will probably give the fuel to break the short-term range. The market is likely more focused on the ECB at this point. Will it cut rates? Will it make further bond purchases (essentially QE). These scenarios or heightened consideration of these scenarios will be pressure for the EUR/GBP.
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.