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EUR/GBP capped by 0.7850

FXStreet (Edinburgh) - The upside momentum in the cross seems to have found solid resistance in the 0.7850 area, with the EUR/GBP now retracing to the 0.7845/40 band.

EUR/GBP hurt by IFO

The intraday recovery was suddenly interrupted after mixed results from the German IFO indicator, showing drops in both Business Climate and Expectations for the month of September albeit a better-than-expected Current Assessment print. The current negative bias around the EUR continues to heavily weigh on the cross, accentuated by the recent recovery in the sterling. “We expect shallow and short-lived gains in this environment and would look to fade modest EURGBP rallies to the high 0.79/low 0.80 region for a test back towards major support at 0.7760/80 (July 2012 low at 0.7757). A sustained push below 0.7760 would keep the broader bear move on track for a medium-term drop to 0.73 (76.4% retracement of the 2007/2008 surge higher)”, noted Shaun Osborne, Chief FX Strategist at TD Securities.

EUR/GBP key levels

The cross is now up 0.02% at 0.7840 with the next resistance at 0.7889 (high Sep.23) ahead of 0.7910 (Tenkan Sen) and finally 0.7915 (high Sep.18). On the flip side, a breakdown of 0.7838 (low Sep.22) would expose 0.7810 (low Sep.19) and then 0.7802 (low Jul.31 2012).

Ruble strengthened to weekly high on exporter demand

USD/RUB opened the trades with a gap lower at 38.46, and continued the slide to weekly low at 38.25 in the first hours; it is currently trading at 38.31.
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