EUR/GBP Price Slide Continues as Support Level Cracks
EUR/GBP News, Price and Analysis:
- Important Fibonacci retracement level pierced.
- EUR/GBP bounces off 200-dma.
EUR/GBP Remains Under Downside Pressure
The month-long sell-off in EUR/GBP has seen the pair break below the 61.8% Fibonacci retracement level of the move, setting the scene for a further move lower in the short- to medium-term. Today’s close and tomorrow’s open remain important to see if support has now turned to resistance. The latest IMF World Economic Output Report may also weigh on the Euro – as well as the British Pound – especially if the latest ECB warning rings true.
ECB vice president Luis de Guindos said in a interview with Spanish newspaper La Vanguardia on Sunday that the global economy will enter recession and so will the European economy, ‘albeit an even more severe one’ as the effects of the coronavirus hammer global growth. He also warned that any recovery in the euro area economic activity in 2021 will not make up for all of the downturn in 2020, leaving the single currency at risk of further depreciation.
The daily EURGBP chart shows the pair made a fresh one-month low earlier today, rejecting the 61.8% Fibonacci retracement and bouncing off the 200-dma. If the pair break the longer-dated moving average – currently at 0.8689 - and open below tomorrow, a further bearish signal will be triggered. Below here, old daily highs and lows provide a congestion zone between 0.8625 and 0.8595 before a likely re-test of 0.8500. The severity of the current short-term sell-off can be seen in the sharp downturn in the 20-dma over the last two weeks.
EUR/GBP Daily Price Chart (September 2019 - April 14, 2020)
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