EUR/GBP Price Analysis: Drops to over 1-week lows, below 0.8900 mark

• EUR/GBP witnessed some follow-through selling for the second straight session on Tuesday.
• The technical set-up still favours bullish traders and supports prospects for additional gains.

The EUR/GBP cross edged lower for the second straight session and retreated further from the key 0.90 psychological mark, or near two-month tops set last Thursday. The dropped to over one-week lows during the mid-European session, with bears maintaining their dominant position below the 0.8900 mark.

This is closely followed by 23.6% Fibonacci level of the 0.9500-0.8671 fall, around the 0.8875 region, which should now act as a key pivotal point for short-term traders. A convincing breakthrough will indicate that the cross might have already topped out, paving the way for additional weakness.

Meanwhile, technical indicators on the daily chart – though have been correcting from higher levels – are still holding in the bullish territory. This, in turn, makes it prudent to wait for some follow-through selling before confirming the bearish bias and positioning for any further depreciating move.

On the flip side, any attempted recovery might now confront immediate resistance near the 0.8925 region, above which bulls are likely to aim back to challenge the 0.9000 mark. The latter coincides with 38.2% Fibo. level, which if cleared should pave the way for some follow-through strength.

The cross might then accelerate the move towards the 0.9060-65 intermediate resistance en-route the 50% Fibo. level near the 0.9100 round-figure mark.

EUR/GBP daily chart

Technical levels to watch