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  • EUR/GBP breaks below the bottom of the triangle pattern and hits levels sub-0.8900.
  • Euro downside momentum is gaining traction with next targets at 0.8860 and 0.8675.

The euro has extended its reversal from last week highs near 0.9100, dropping to levels below 0.8900 for the first time since early September, and thus breaking below the bottom of a triangle formation from May lows.

The common currency has surrendered against Sterling’s strength and is depreciating more than 1% so far this week. The GBP was boosted on Monday by news about the promising results of Pfizer’s coronavirus vaccine and remains bid on Tuesday amid market speculation of an imminent Brexit deal.

Although the pair has managed to pick up and return above 0.8900, it remains well below the mentioned trendline support, now at 0.8965. This might attract sellers and drive the pair towards 0.8860 (June and September lows) on its way to April lows at 0.8675 area.

On the other hand, a potential bullish reaction should be confirmed above 0.8965 (previous trendline support) which would clear the path towards trendline resistance around 0.9045 and then 0.9070 (November 5 highs).

EUR/GBP daily chart

EURGBP daily chart

Technical levels to watch