Search ForexCrunch

   “¢   Euro starts losing ground after Italy confirms the 2019 budget deficit target of 2.4%.
“¢   The British Pound seemed rather unaffected by disappointing UK services PMI.
“¢   Investors now eye the UK PM May’s speech for any Brexit-related update.

The EUR/GBP cross surrendered early gains to near one-week tops and has now dropped to fresh session lows, farther below the 0.8900 handle.

The shared currency started losing positive momentum after Italy’s deputy Prime Minister Luigi Di Maio confirmed 2019 budget deficit target of 2.4% and said that the government is still mulling over cutting deficit after that.

Meanwhile, the British Pound seemed rather unaffected by today’s slightly weaker than expected UK services PMI and held on to its positive bias, which was seen exerting some additional downward pressure on the cross.

The downside, so far, remained limited as traders seemed reluctant to place any aggressive bets ahead of the UK PM Theresa May’s speech at the Conservative Party annual conference, which will be looked upon for any fresh Brexit update.

It would now be interesting to see if the cross is able to build on this week’s goodish rebound from near two-week tops or the current pull-back marks the resumption of the prior depreciating slide, witnessed over the past one week or so.

Technical levels to watch

Immediate support is pegged near the 0.8875 region (100-day SMA), below which the cross is likely to accelerate the slide towards testing the 0.8850 area. On the flip side, the 0.8915-20 region now becomes an immediate hurdle, which if cleared might trigger a short-covering bounce towards 0.8935 supply zone en-route the 0.8965-70 horizontal resistance.