April 07, 2011
Technical Analysis Daily: EUR/USD
On Tuesday the Euro/Dollar traded within a 100 pip range. After the European currency descended down to 1.4151, it started appreciating up to 1.4245 yesterday, matching the positive Interbank sentiment projection at almost +7%, closing the day at 1.4220. This morning the pair climbed further up, reaching 1.4266. On the
Trade Idea: USD/CHF – Stand aside
Although the greenback jumped this morning in Asia to 0.9296, as price has retreated from there, consolidation with mild downside bias is seen for test of the Ichimoku cloud bottom (now at 0.9231) but break of 0.9205 (yesterday’s low) is needed to signal rebound from 0.9192 has ended and bring
Market Morning Briefing
Strong rise in the Pound (1.6328) yesterday from a low near 1.6090 after much better than expected UK PMI data. The rise continues, but could top off near 1.64 before the BOE Meeting on Thursday. The Euro (1.4260) is also strong, in line with our expectation, having recovered well from the fall to 1.4150 yesterday.
Risk-Appetite Dominates Markets As USD & JPY Decline
Minutes of last month's FOMC meeting showed that policy makers differed over whether to begin removing the stimulus this year, discussing the monetary policy after completion of the $600 Billion bond-purchase program. Some members indicated that the current scenario may warrant a less-accommodative monetary policy this year while others wanted
April 06, 2011
Trade Idea: EUR/USD – Buy at 1.4180
Despite yesterday’s brief fall to 1.4152, as the single currency staged a strong rebound after forming a small ‘hammer’ candlestick pattern on the hourly chart, suggesting recent upmove is still in progress and test of indicated chart resistance at 1.4283 would be seen, however, break there is needed to retain
Forex and Dow Jones Recommended Levels
EUR/USD Today's support: - 1.4130, 1.4078, 1.4040 and 1.4023(main), where correction is possible. Break would give 1.3996, where correction also may be. Then follows 1.3973. Break of the latter would result in 1.3916. If a strong impulse, we would see 1.3892. Continuation will give 1.3863.
Daily Forex Update: EUR/CHF
EUR/CHF has just reached the lower boundary of the Forecast Zone calculated for the completion of the high Quality Down Channel chart pattern identified by Autochartist on the daily charts. The Quality of this chart pattern is rated at the 8 bar level as a result of the sharp preceding
The Daily Wave Analysis
The price has moved in the expected direction, however hasn't received pulse development. Probably flounce (b) of [iv] still will continue the formation, for example in the form of the Double Zigzag. If the assumption is true, within the limits of its terminations of steam still will continue growth. As
Asia Session: The Yen Slide Continues
The downfall of the Japanese yen continued on in Asia, with the currency falling to some fresh lows as the markets looks for higher yielding assets. With the assumption that the ECB will raise rates on Thursday and that the US may only be a quarter or two behind, investors
Trade Idea: USD/JPY – Buy at 84.75
Yesterday’s rally and the breach of resistance at 84.74 confirms recent upmove from record low of 76.25 has resumed and may extend further gain to 85.75 and possibly towards 85.95/00 (100% projection of 82.57 to 84.74 measuring from 83.80), however, near term overbought condition should prevent sharp move beyond there
FX Technical Commentary
Euro 1.4260 Initial support at 1.4062 (Apr 1 low) followed by 1.4021 (Mar 28 low). Initial resistance is now located at 1.4282 (Nov 4 high) followed by 1.4373 (76.4% retrace of 1.5144-1.1877)
FOMC Member Divided On Whether To Unwind Stimulus
FOMC minutes for the March meeting indicated that policymakers were divided on whether to begin exiting monetary stimulus this year. While the economic outlook over the medium-term was largely unchanged from the projections published in January, the staff revised up its projection for consumer price inflation in the near-term, largely
The Daily Forecaster: GBPUSD
It seems I misjudged the earlier correction as part of a slower bullish structure which provoked a break above the 1.6234-64 resistances to reach above 1.63 this morning. The 1.6326-42 area should cap and trigger a correction. This should remain above the 1.6020-40 retracement support to generate another leg higher
Trade Idea: GBP/USD – Buy at 1.6230
As the British pound has continued to move higher in part due to cross-buying, suggesting the rise from 1.5937 is still in progress and further gain to 1.6370/75 is likely, however, near term overbought condition should prevent sharp move beyond there and resistance at 1.6403 would hold and risk has
The Chinese Economy Raises Interest Rate To 6.31% For A Fourth Time To Cool Down Inflation
The Chinese economy has announced its decision about the interest rates, where the PBOC has decided to raise the overnight cash target rate for a fourth time since October 2010 by 25 basis points to 6.31%, as the nation try to cool down inflation rates during the first half of the year.
Daily Financial Market Outlook
While the BOE is still expected to leave policy unchanged after tomorrow's MPC meeting there, is no denying that pressure is mounting on the Bank. Yesterday saw interest rates go up in both China and Poland and of course are expected to be raised in the Euro area on Thursday.
Daily Report: Yen and Dollar Extend Down Trend
Yen and dollar resume weakness today and are both broadly lower against European majors. Yen extended the post intervention decline as partly driven by revival of carry trades. In addition, BoJ is said to be considering a credit program to spur lending for reviving the economy after March's natural disaster.
Asian Market Update
Asian markets were mixed to higher, May copper came close to $4.32 rising well over 1%. Shanghai Composite rose over the 3,000 level after the PBoC increased interest rates by 25 basis points, to 3.25% for 1-year deposits in local currency, and 6.31% for 1-year loans. This marks the 4th
Foreign Exchange Market Commentary
EUR/USD closed slightly higher on Tuesday and the high-range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI remain neutral to bullish signalling that sideways to higher prices are possible near-term. If it extends the rally off January's low, weekly resistance crossing is
US FED Keeps Printing Press, Gold Soars
U.S. Dollar Trading (USD) the market bought the USD on mild risk aversion for the first half of the day before reversing late in the day after the FOMC minutes. China raised Interest rates by 0.25% and Portugal was downgraded by one notch by Moody's to Baa1. The March FOMC
April 05, 2011
Technical Analysis Daily: GBP/USD
GBP/USD 1.6138
GBP/USD Open 1.6132 High 1.6178 Low 1.6090 Close 1.6127
On Monday Pound/Dollar continued the upward trend with a weak push up, climbing with around 80 pips, in line with the positive Interbank sentiment at above +3%. The Cable appreciated from 1.6099 to 1.6127 yesterday, closing the day at 1.6104. Today the British Pound weakened down to 1.6090, andter which commenced recovering. On the 1 hour chart quotes returned to the trading range, while on the 3 hour chart trading is still within the wide range. First resistance is yesterday's peak at 1.6178. Break above it should extend the bullish movement further towards the 1.6300. The nearest support is today's bottom at 1.6090. Going bellow it should extend British Pound's reduction further down towards next downward objective 1.5971. Today is UK CIPS services index at 8:30 GMT. Quotes are moving above the 20 and 50 EMA on the 1 hour chart, indicating bullish pressure. The value of the RSI indicator is positive and inclining upwards, MACD is thinly positive and quiet, while CCI has crossed up the 100 line on the 1 hour chart, giving overall long signals.
Technical resistance levels: 1.6178 1.6300 1.6426
Technical support levels: 1.6090 1.5971 1.5850
Trading range: 1.6125 - 1.6200
Trend: Upward
Buy at 1.6138 SL 1.6108 TP 1.6188
EUR/GBP Daily Outlook
Daily Pivots: (S1) 0.8790; (P) 0.8815; (R1) 0.8837; More
A temporary top should be in place in EUR/GBP at 0.8852 and some consolidations could be seen below there. But near term outlook will remain bullish as long as 0.8653 support holds. Above 0.8852 will target 0.8940 resistance first. However, break of 0.8653 will indicate that EUR/GBP has topped out in near term and will bring deeper pull back.
In the bigger picture, the strong break of medium term trend line resistance revives the case that correction from 0.9799 has finished with three waves downside to 0.8607 already. The long term up trend that started back in 2000 might be resuming. Further break of 100% projection of 0.8067 to 0.8940 from 0.8284 at 0.9157 will indicate that rise fro 0.8067 is likely developing into an impulsive wave and will further affirm this bullish case. EUR/GBP should target a new high above 0.9799 then. On the downside, break of 0.8284 support is now needed to indicate that rebound from 0.8067 is completed. Otherwise, outlook will remain bullish even in case of deep pull back.
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EUR/CHF Daily Outlook
Daily Pivots: (S1) 1.3079; (P) 1.3132; (R1) 1.3178; More
A temporary top should be in place in EUR/CHF at 1.3184. Intraday bias is mildly on the downside for retreat towards 4 hours 55 EMA (now at 1.2996). But after all, near term outlook remains cautiously bullish as long as 1.2736 support holds. Current rise from 1.2432 is treated as the third leg of the consolidation pattern from 1.2401. Above 1.3184 will bring another rise to 100% projection of 1.2401 to 1.3203 from 1.2432 at 1.3234 or even further to 55 weeks EMA (now at 1.3432).
In the bigger picture, whole down trend from 1.6287 (2007 high) is still in progress and in any case, medium term outlook will remain bearish as long as 1.3833 resistance holds. The current down trend would likely continue through 1.2 psychological level towards 100% projection of 1.5138 to 1.2765 from 1.3833 at 1.1460, which is close to long term projection level at 1.1516. However, break of 1.3833 will confirm medium term bottoming and should bring strong rebound to 1.4315 resistance and above.
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Market Drivers - Currencies
Market plays a waiting game
EURUSD (SELL): Sideways in the market.EURCHF (SELL): Strong resistance at 200-day moving average.EURSEK (SELL): Trades at the top of a 2-year trend line.EURUSD (SELL): In the short term, the market still trades in a rising trend channel. We expect that the cross rate is close to the top. Over the past two weeks, we have traded in a very narrow range and we expect that the market will breach on the downside. We will see this week’s big trigger on Thursday, namely the ECB’s interest-rate meeting; the market is playing a waiting game and therefore we do not expect it to move by more than +/-1% until the outcome of the meeting is known.
EURCHF (SELL): Yesterday the market traded just above the 200-day moving average. We expect that both the trend line and the 200-day moving average will offer resistance, i.e. we believe the appreciation is over and that the market will fall to 128.50. We recommend that investors use the options market if they are concerned whether the resistance will last or not.
EURSEK (SELL): The market again trades at the upper 2-year trend line. We have heard that many foreign investors (in the UK and the US) have sold SEK positions. We expect that the Swedish economy will still be among the strongest ones and that Riksbanken will raise its rate another three times this year. We expect the upper trend line to hold firm. Strong resistance is offered at 903-904. Watch out whether speculators will try to take out weak stops.
EURGBP (NEUTRAL): GBP tends to trend and therefore investors should watch out whether 87.60 is breached; if that happens, it will most likely signal a decent appreciation of pound sterling. Today’s PMI figures may be the triggering factor.
Today’s most important events:
10:30 PMI Service (GBP)
16:00 ISM Service (USD)
ISM service from the US; consensus points to 59.9 against 59.7 last time
Chart of the day: EURSEK
Full Report in PDF
Today's Market Outlook
Retraces the latest rally from 1.4060 that peaked at 1.4267, fresh yearly low, yesterday. Near 50% has been retraced so far at 1.4168, with higher low seen in this area, as hourly studies approach oversold zone, to maintain near-term bulls. Upside clearance of 1.4267 is needed to expose key resistance at 1.4280, Nov 2010 peak/major bear trendline resistance. On the downside, loss of 1.4150/40 will sideline bulls and signal return to 1.4060/40, key near-term support zone.
Res: 1.4206, 1.4231, 1.4249, 1.4267
Sup: 1.4163, 1.4140, 1.4131, 1.4115
Eases back after yesterday’s double failure at 1.6175. Downside remains supported by 1.61 zone for now, keeping the upside in focus, with break above 1.6175 to resume near-term recovery attempt and open 1.6220/65, 61.8% of 1.6400/1.5935 / 24 Mar high, next. Loss of 1.61 zone, however, would signal lower top and open way for retest of key near-term support zone at 1.5970/40.
Res: 1.6175, 1.6200, 1.6220, 1.6270
Sup: 1.6100, 1.6090, 1.6015, 1.5970
Friday’s break above 200 day MA at 83.60, has given an additional boost to the pair, clearing 84.00 barrier and key short-term resistance at 84.49, Dec 2010 high, to hit 84.72 high thus far. This now signals fresh phase of recovery from 89.00 record low and looks for test of 85.00/90 next. Brief break below initial support at 84.00 has been contained at 83.85, and while above 83.85/70 zone, focus remains at the upside..
Res: 84.40, 84.49, 84.75, 85.00
Sup: 84.15, 84.00, 83.85, 83.70
Reversal from fresh 3-week high at 0.9338, posted last Friday, has so far found support at 0.9190, trading in 0.9190/0.9250 range. Break above 0.9250 is required to continue near-term uptrend and open 0.9338 for retest, break of which will expose key short-term barrier at 0.9367. On the downside, loss of 0.9190 will allow for further easing, and only loss of 0.9125, 31 Mar higher low / near 50% of 0.8900/0.9338 ascend would delay.
Res: 0.9252, 0.9260, 0.9293, 0.9338
Sup: 0.9190, 0.9170, 0.9140, 0.9125
Quiet Sideways Oriented FX Trading At Onset New Week
Global core bonds book some moderate gains
In a technically driven session, the German bund tested the key 120.92 resistance level for a second trading day in a row. A sustained breakthrough failed and the Bund ended slightly above its opening level. The June note future showed a similar trading pattern but in the US the yield curve bull steepened slightly on dovish comment by Fed chairman Bernanke.Quiet sieways oriented FX trading at onset new week
Currencies traded range-bound and technically inspired as the calendar was uneventful. While calendar heats up today, we think that most investors will await the key ECB meeting on Thursday before considering whether the euro has more upside or whether it is profit taking time. Similar picture for USD/JPYUS Equities ended the rather uneventful session unchanged on Monday. The S&P rose 0.03% led by materials and health care, while technology shares dropped 0.50%. This morning, Asian shares trade mixed, while China outperforms.The yield on Portuguese five-year benchmark bonds rose yesterday to almost 10%, but the caretaker Prime Minister Socrates vowed to keep resisting a foreign financial rescue for the debt-laden country. This morning, Moody's downgraded Portugal's sovereign bond rating from A3 to Baa1, still under review for a possible downgrade.Fed Chairman Ben Bernanke said overnight that the increase in US inflation is driven primarily by rising commodity prices globally and is unlikely to persist. In the medium term he added, that inflation, if anything, will be a bit low.Euro zone finance ministers will meet on Friday in Budapest to discuss Portugal's options to solve its debt problems under a caretaker government, including whether it is capable of requesting EU financial aid, a source said.Australia's central bank held interest rates unchanged at 4.75% this morning, reiterating that the strong local currency, moderate wage growth and intense retail competition would help keep inflation contained for the year ahead.The United States will hit the legal limit on its ability to borrow no later than May 16, Treasury Secretary Geithner said on Monday, ramping up pressure on Congress to act to avoid a debt default.Brent crude oil prices rose yesterday above $121 a barrel, their highest level since 2008 as Nigerian election delays and a short-lived strike in Gabon jointed the list of geopolitical supply concerns.Today, the eco calendar contains the euro zone (final) and UK services PMI, the euro zone retail sales and US non-manufacturing ISM EUR/USD (2007- ): at technical crucial levels, which if sustainably broken would theoretically point to targets at 1.5706 and 1.6690. Has a Mr. Trichet notion of technical analysis? Will he keep rhetoric in check? EUR/JPY: yen is in sideways trading range, but top was tested in the wake of the US payrolls. We still favour a buy-on-dips approach, but a sustained break above would be highly favourable for dollar, but it is risky to front run on such a potential break EUR/GBP: euro positive picture with risk for extension to the 0.89417 October 2010 high, but currently in overbought conditions and also ahead of ECB meeting investors were remain largely sidelined
In a technically driven session, the German bund tested the key 120.92 resistance level for a second trading day in a row. A sustained breakthrough failed and the Bund ended slightly above its opening level. The June note future showed a similar trading pattern but in the US the yield curve bull steepened slightly on dovish comment by Fed chairman Bernanke.Quiet sieways oriented FX trading at onset new week
Currencies traded range-bound and technically inspired as the calendar was uneventful. While calendar heats up today, we think that most investors will await the key ECB meeting on Thursday before considering whether the euro has more upside or whether it is profit taking time. Similar picture for USD/JPYUS Equities ended the rather uneventful session unchanged on Monday. The S&P rose 0.03% led by materials and health care, while technology shares dropped 0.50%. This morning, Asian shares trade mixed, while China outperforms.The yield on Portuguese five-year benchmark bonds rose yesterday to almost 10%, but the caretaker Prime Minister Socrates vowed to keep resisting a foreign financial rescue for the debt-laden country. This morning, Moody's downgraded Portugal's sovereign bond rating from A3 to Baa1, still under review for a possible downgrade.Fed Chairman Ben Bernanke said overnight that the increase in US inflation is driven primarily by rising commodity prices globally and is unlikely to persist. In the medium term he added, that inflation, if anything, will be a bit low.Euro zone finance ministers will meet on Friday in Budapest to discuss Portugal's options to solve its debt problems under a caretaker government, including whether it is capable of requesting EU financial aid, a source said.Australia's central bank held interest rates unchanged at 4.75% this morning, reiterating that the strong local currency, moderate wage growth and intense retail competition would help keep inflation contained for the year ahead.The United States will hit the legal limit on its ability to borrow no later than May 16, Treasury Secretary Geithner said on Monday, ramping up pressure on Congress to act to avoid a debt default.Brent crude oil prices rose yesterday above $121 a barrel, their highest level since 2008 as Nigerian election delays and a short-lived strike in Gabon jointed the list of geopolitical supply concerns.Today, the eco calendar contains the euro zone (final) and UK services PMI, the euro zone retail sales and US non-manufacturing ISM
On Monday, EUR/USD hovered listless and directionless in a tight range in a session devoid of important eco releases or other events. Other markets like equities and bonds showed no more animus. Only commodities, especially oil traded with vigour and the CRB index has now mostly recouped the post- Japan earthquake sell-off.
There were more signs that the doves are still in the FOMC's driving seat, resisting the call of the impatient hawks to start exiting the very accommodative stance. The hawks' offensive has been countered by NY Fed Dudley on Friday, which got the blessing of Bernanke overnight. The Fed chairman said that the recent increase in inflation was driven by commodity prices globally and that it is unlikely to persist. It is transitory and added the chairman, medium term inflation if anything will be a bit low. These are not the words of a Fed chairman who is trigger- happy to fight the next eventual inflation battle. Other renowned doves like Atlanta Fed Lockhart said inflation will remain moderate, while the St-Louis Fed research director said QE-2 is in the bag and added he expects the Fed to keep its balance sheet constant for at least 1 FOMC meeting after QE-2 ends and thus in the mean time re-invest maturing assets. So, it seems that the debate on a potential change in Fed policy is postponed by a number of months.
Intra-day, EUR/USD hovered following a technically temporary inspired spike in Asian trading between 1.4193 and 1.4250, directionless and little changed overnight, suggesting that Bernanke's words, which are intrinsically euro positive, were already largely discounted. The pair closed yesterday at 1.4221, down from Friday's 1.4235 closing level.
Regarding trading today, The EMU final services PMI and retail sales shouldn't move the market. The US non-manufacturing ISM is more important from an economic point of view. It should print strong, but slightly off February's reading. If recent trading patterns hold, than even a stronger figure won't be enough to give the dollar more than very temporary support, as the ECB meeting of Thursday remains on the radar of traders and investors. The situation in Portugal continues to deteriorate, but doesn't look to be an item anymore for currency markets. After all, it is a small spot in the big euro area. However, no complacency as an overt crisis may still make EMU official nervous and prone to lose their cool. However, it is a risk factor, not a main theme currently. There is a long list of Fed and ECB speakers that may give traders some food for thought, but Fed speakers have already expressed their views on policy and the ECB ones shouldn't utter their views two days before a key meeting. We will scrutinize the Minutes of the March FOMC meeting to get a flavour of the direction of the debate inside the Council, but as all participants have in the mean time expressed their views, it would surprise us to read much new in the Minutes. Therefore, we think that EUR/USD will continue to show the recent trading pattern. Overbought conditions and the nearness of key resistance levels cap the upside going into the ECB meeting on Thursday. Periodic dollar buying won't carry far and will be met by renewed euro buying. The ECB meeting on Thursday will be decisive whether key resistance is broken or whether a more sustained profit taking pushes the pair again lower.
Regarding the technicals, the pair is near very key resistance levels, which if broken sustainably may accelerate the euro buying. Indeed the 1.4266 level is the incoming downtrendline since the historical high and 1.4283 is the November high and the neckline of a massive double top. A sustained break would be highly relevant. The different outlook for official rates on both sides of the Atlantic might provide a trigger for such a break. We have been skeptical of such a break occurring, as in a broader perspective, there is already a massive double bottom in place in EUR/JPY and also EUR/GBP shows some possibilities in this direction. Such a generalized euro strengthening would rapidly push the trade weighted euro into dangerous territory and risk to cool the EMU economy fairly fast, which risks being a disastrous for the periphery. So, the move could exhaust itself, but the timing of it is object of debate. However, it seems that the ECB isn't yet concerned about the euro (is still not expensive in trade weighed terms) and thus investors shouldn't neglect the possibility of such a break, especially should Trichet up the hawkishness during his press conference. However, we would not front run such an event, but it might be wise to set some stop loss protection above the resistances.
EUR/USD (2007- ): at technical crucial levels, which if sustainably broken would theoretically point to targets at 1.5706 and 1.6690. Has a Mr. Trichet notion of technical analysis? Will he keep rhetoric in check?Support comes in at 1.4183 (week low), at 1.4158 (MTMA) and at 1.4129/25 (28 weekly envelop/ weekly STMA).
Resistance stands 1.42.66/69 (today high/downtrendline since historical high), at 1.4283 (Nov. 2010 high/neckline double bottom/ daily envelop), at 1.4327 (Bollinger top) and at 143.73 (76% retracement Nov 2009 high).
The pair is in overbought conditions
On Monday, USD/JPY ended the session exactly at the same 84.06 level where it closed on Friday eve. Intra-day, the pair slid very gradually somewhat lower in the European session, probably on disappointment that the test of the technical key 84.51 level on Friday failed. However, there was no momentum at all behind this micro- move lower and the losses were easily recouped later in the US session.
Overnight, Japanese equities are under downward pressure, but off intra-day lows. A Japanese Minister said that the government might issue more debt to finance the reconstruction, while FM Noda plans to seek more cooperation from the G7 at a meeting on April 14. The G7 intervened to reverse a strengthening yen, which succeeded well. The underlying picture is still yen negative as carry trades are still in vogue. The USD/JPY bulls of course aren't throwing in the towel after a failed test of key resistance at 84.51 with a new high at 84.72 and might look for a new test. Maybe the remarks of Noda have given them some courage to try it again. The pair is up from yesterday's close, trading at about 84.40. We don't see much on the calendar (see EUR/USD) that might help them, but a stronger-than-expected US nonmanufacturing ISM might be a trigger for a next test. However, overbought conditions and the importance of the resistance level makes us think that also the second test will fail. However, it is no time for complacency. A sustained break shouldn't be ignored and might have far-reaching technical importance.
EUR/JPY: yen is in sideways trading range, but top was tested in the wake of the US payrolls. We still favour a buy-on-dips approach, but a sustained break above would be highly favourable for dollar, but it is risky to front run on such a potential breakSupport comes in at 83.85/68 (week low/STMA), at 83.23 (break-up daily) and at 82.73 (weekly).
Resistance is seen at 84.47 (week high), at 84.74/78 (recovery high/Weekly Bollinger top) and at 84.86/91 (Monthly MTMA/Bollinger top).
The pair is in overbought territory.
On Monday, EUR/GBP lost some ground, as markets digested the recent euro rally. The losses were during the Asian session. During the European and US session, movements were very limited and euro positive. In the end, EUR/GBP closed at 0.88151 compared to 0.8834 on Friday eve.
There was talk in the market about the possibility of M&A related flows in favour of sterling, as Vodafone is selling a stake in France's SFR. The construction PMI was stronger too, but we wouldn't draw too many conclusion from it, neither did the market. While the EMU calendar is unimportant today, the release of the UK services PMI is more interesting. Services PMI is expected to stabilize at 52.6 in March after a significant decline in the month before. We believe however that a slight increase is not excluded, in which case sterling might gain somewhat. All in all, we think that as per other euro crosses, the market will wait on the outcome of the ECB (and BoE) meetings to express their opinions on future currency moves. Given the recent strong euro run and overbought conditions, there is some scope for a correction in the pair ahead of Thursday, but also here it should be very limited in nature.
Since early January, the pair moved up and down within a range of 0.8285 and 0.8672. In the February inflation report, the BoE saw rising upside inflation risks, but BoE governor King was less committed to a rate hike than a lot of investors had anticipated. So, there was a window of opportunity to take profit on sterling long positions. EUR/GBP moved gradually away from the February lows and the ECB talk at the March meeting propelled EUR/GBP beyond the 0.8500/29 resistance. This improved the short-term picture in this cross rate. The pair also rose beyond the 0.8672 level (previous 2011 high), but the EUR/GBP rebound slowed temporary earlier this week. The overall picture remains EUR/GBP constructive. So, the 0.8818/08941 area is the next upside target on the charts. There is no reason to row against the tide and even as the current move matches our long-term sterling skeptic attitude, we get some fear of heights.
EUR/GBP: euro positive picture with risk for extension to the 0.89417 October 2010 high, but currently in overbought conditions and also ahead of ECB meeting investors were remain largely sidelinedSupport comes in at 0.8792/84 (week low/weekly envelop), at 0.8773 (reaction low hourly/MTMA), and at 0.8753 (30 March low).
Resistance is seen at 0.8841/44/ (weekly +Bollinger top/Reaction high hourly), at 0.8853 (year high), and at 0.8886 (Bollinger top).
The pair is in overbought territory.
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