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Forex: EUR/GBP approaches 0.8400 support after Draghi

FXstreet.com (Barcelona) - The EUR/GBP fell from its highs, at 0.8438, and tumbled almost 30 pips on ECB Draghi’s speech in Rome. The cross is now pressured back to its support area, close to the 0.8400 mark, after an open mind towards more rate cuts. That psychological level has been holding the pair since April 25, despite several attempts to the downside.

Draghi’s comments in Rome include advices to governments, defending tax reduction as priority and more equal wealth distribution in the Eurozone to improve economic performance. However, budget consolidations remains imperative, particularly for the most indebted countries.

“The EUR/GBP has formed an interim low at 0.8398 close to the 38.2% retrace of the 0.7755 - 0.8815 rise seen since last July”, wrote MIG Bank analysts Bijoy Kar and Luc Luyet, expecting further near term strength, however, an eventual break under this level is sought to retest the rising trend-line from the 0.7755 low, currently near 0.8300.

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The setback of the euro against the dollar seen on the back of Draghi's comments seems to have found an interim support at the 1.3050 area.
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