EUR/GBP struggles at fresh highs, eyes on ket support target

• EUR/GBP slumping at the fresh highs scored in the open.
• GBP is down in the dumps and market COVID-19 sentiment could be the catalyst for 0.90. 
• EUR/GBP may require a technical pullback prior to the next impulse into the 0.90 handle. 

EUR/GBP is failing to hold onto the market’s opening highs and is slumping from 0.8957 to trade around 0.8941 at the time of writing. The cross remains in positive territory for the day, yet the week ahead will be important for the euro. 

Firstly, the dominance of the US dollar is a spanner in the works for the single unit. The greenback’s safe-haven character enables it to benefit from the fragility in equity markets all the while the Federal Reserve’s sticks with its positive rate stance – negative rates are simply not an option.

Eyes on COVID-19 case count

All eyes will remain on how nations manage over the course of this next week with there being plenty of time to collect data on COVID-19 cases. We would expect to see the US dollar unwind some safe-havenness should optimism turn out to be front and centre of markets. Positive outcomes in the re-opening of economies with minimal new cases surfacing will be a positive factor for the euro and euro crosses. It could be just the ticket to push EUR/GBP into the 0.90 handle. The forward-looking May PMIs on Friday should recover from the record lows and be an additional positive for the euro. 

• UK’s Frost: Tells UK PM, Barnier ‘losing the argument’ in Brexit trade row – Telegraph

• BoE Examining Negative Rates, Haldane Tells Telegraph – BBG

As per EUR/GBP pops to fresh Brexit/economy-woe highs, bulls seeking out the 0.90s, markets may not be so interested in the data while Brexit headlines take the helm as far as GBP goes. On Friday, however, we will have the year on year Retail Sales (Fri) but before then, April Consumer Price Index will be in focus (factoring a drop in the oil price). Tuesday’s  UK jobs data will not fully show the full extent of COVID-19’s impact. 

EUR/GBP levels

We are watching for a pullback to key support before the next impulse to the upside. As per, Chart of The Week: EUR/GBP Price Analysis, bullish to 0.9060, although pullback to support first? the bulls are seeking out the 0.90 handle with 0.9060 as a keen target.