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EUR/GBP Technical Analysis: Rally to 6-Week High Fizzles

EUR/GBP Technical Analysis: Rally to 6-Week High Fizzles

Ilya Spivak,

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Talking Points:

  • EUR/GBP Technical Strategy: Flat
  • Euro fails to hold gains after spiking to a 6-week high vs. Pound
  • Waiting for confirmation to enter short in line with dominant trend

A Euro has struggled to make lasting progress out of familiar territory near 0.85 figure against the British Pound, failing to sustain a short-lived spike to a six-week high. The overall trend bias seems to favor weakness but the correction from early-December lows is yet to be overturned.

A daily close above the 38.2% Fibonacci retracement at 0.8673 opens the door for a test of the 50% level at 0.8787. Alternatively, a reversal below the 23.6% Fib expansion at 0.8442 paves the way for a challenge of the 0.8301-34 area (38.2% expansion, September 6 low).

Positioning is inconclusive at this point. The 2017 fundamental outlook seems to favor the short side but pulling the trigger on a trade now seems premature while the near-term series of higher highs and lows remains unbroken. As such, opting for the sidelines seems most prudent for now.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.