EUR/GBP found strong resistance at the magical 0.95 line, and slipped downwards. It doesn’t have much room to move due to uptrend support. This week’s high volatility should push it over the top – breaking resistance on the road to parity.
EUR/GBP traded this week in a 250 pips range, from 0.9420 to 0.9170. In the previous week, EUR/GBP found strong resistance at the 0.95 line, which was the high point in January 26th.
This downwards slip happened as the Euro showed weakness, and the Pound remained strong without any reason. Since EUR/GBP broke the downtrend resistance it moved nicely forward, until meeting this strong resistance, which proved very strong.
Now, as the graph shows, there’s another line – below EUR/GBP. This uptrend support was formed from the lows of mid October, formed in mid February and successfully passed tests at the end of February and the end of March.
This uptrend support is climbing steadily, and currently stands at 0.9050. The flat resistance line, and the uptrend support meet only in May, but volatility is strong.
EUR/GBP was once a currency that traded in very small ranges, as the Euro and the British Pound moved very similarly against the US dollar. Since October, this trend changed, and this cross goes wild.
This week’s events, with the G20 summit, rate decision by the ECB and lots of British figures provide lots of opportunities for the EUR/GBP to shake. I continue to stress that the British Pound should go down, and that Europe has a much healthier economy. Upcoming Non Farm Payrolls in the US also supply fuel to the markets, even though they don’t directly affect this pair. Check out the Forex Weekly Outlook.
EUR/GBP Parity was near at the beginning of the year, and I do believe that now, at the end of the first quarter, it can get close to it again, breaking resistance and pushing forward.
I like the EUR/GBP cross, and I’ll follow it closely in the upcoming week.