Search ForexCrunch
  • EUR/GBP climbed to over two-week tops in reaction to upbeat French/German PMI prints.
  • Bulls await a move beyond 200-period SMA on the 4-hourly chart before placing fresh bets.

The EUR/GBP cross edged higher through the early European session and shot to two-and-half-week tops, around the 0.8645 region in the last hour.

The shared currency found some support following the release of better-than-expected PMI prints from France and Germany. On the other hand, softer UK consumer inflation figures further contributed to the British pound’s relative underperformance against its European counterpart.

From a technical perspective, the uptick stalled near a resistance marked by the 200-period SMA on the 4-hourly chart. Bulls might wait for some follow-through buying beyond the mentioned barrier before positioning for an extension of the recent bounce from over one-year lows.

Meanwhile, oscillators on hourly charts have been gaining positive traction but are yet to confirm a bullish bias on the daily chart. This, in turn, warrants some caution for aggressive bullish trades amid a spike in COVID-19 infections and pandemic-related lockdowns in Europe.

That said, a sustained move beyond the said hurdle could push the EUR/GBP cross beyond monthly swing highs, around the 0.8665-70 region. The momentum could further get extended towards the 0.8700 mark, above which bulls might aim to retest the 0.8730-35 supply zone.

On the flip side, a short-term descending trend-line resistance breakpoint, currently around the 0.8600 mark now seems to protect the immediate downside. Any subsequent slide might be seen as an opportunity to initiate bullish positions and remain limited.

EUR/GBP 4-hourly chart

fxsoriginal

Technical levels to watch