“¢ German political headlines trigger some volatility.
“¢ Dovish ECB twist/goodish GBP rebound to cap strong up-moves.
The EUR/GBP cross surrendered early modest recovery gains and dropped to fresh session lows in the past hour, albeit recovered few pips thereafter.
The shared currency came under some renewed selling pressure over the past hour or so and was being weighed down by conflicting reports that CSU wants to break its alliance with Merkel’s CDU, albeit a senior CSU lawmaker denied the rumours.
With investors still adjusting to a surprisingly dovish twist by the European Central Bank on Thursday, the news resulted into a sudden fall in the Euro. The downfall turned out to be rather shallow and thus, helped limit any deeper losses.
Meanwhile, a goodish rebound witnessed around the GBP/USD major further collaborated to the pair’s retracement from higher and might continue to keep a lid on any meaningful recovery, at least for the time being.
Technical levels to watch
Any subsequent selling has the potential to drag the cross towards test the 0.8700 handle, below which the downfall is likely to get extended further towards the 0.8630 support area.
On the upside, mid-0.8700s area, nearing 50-day SMA, now seems to have emerged as an immediate hurdle and is followed by 100-day SMA hurdle near the 0.8785-90 region.
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