EUR/GBP – Euro Poised For Further Declines Vs British Pound
Aayush Jindal
Key Highlights
The Euro after setting a top near 0.8880 against the British Pound started a downside correction.
The EUR/GBP pair recently cleared two important bullish trend lines around 0.8800 to initiate a bear wave.
Recently in the Euro Area, the Unemployment Rate for May 2017 was released, which remained unchanged from 9.3%.
Today in the UK, the PMI Construction for June 2017 will be released by the Chartered Institute of Purchasing & Supply and Markit Economics, which is expected to decrease from 56 to 55.
EURGBP Technical Analysis
The Euro likely formed a short-term top on 28th June 2017 at 0.8880 against the British Pound. The EUR/GBP pair has started a correction and might trade towards 0.8720.During the downside wave, the pair broke two important bullish trend lines near 0.8800 on the 4-hours chart.The pair also cleared the 50% Fib retracement level of the last wave from the 0.8719 low to 0.8880 high. It has opened the doors for more losses below 0.8780 since the pair is now below the 100 SMA (H4).The next major support is around the 200 SMA (H4) at 0.8732, followed by the last swing low of 0.8720. On the upside, the 0.8800 handle may now act as a resistance and prevent gains in the short term.
Euro Area Unemployment Rate
Recently in the Euro Area, the Unemployment Rate for May 2017 was released by the Eurostat. The market was aligned for a decrease in the rate from 9.3% to 9.2%.The actual result was on the lower side, as the Euro Zone Unemployment Rate remained at 9.3%.The report stated that:
This remains the lowest rate recorded in the euro area since March 2009. The EU28 unemployment rate was 7.8% in May 2017, stable compared to April 2017 and down from 8.7% in May 2016.
The impact on the Euro was not much, as the shared currency traded in a range against the US Dollar and British Pound with a slight bearish angle.
Economic Releases to Watch Today
RBA Interest Rate Decision - Forecast 1.5%, versus 1.5% previous.
UK’s Construction PMI for June 2017 – Forecast 55, versus 56 previous.
Euro Zone PPI for May 2017 (YoY) - Forecast +4.1%, versus +4.3% previous.
Euro Zone PPI for May 2017 (MoM) - Forecast -0.2%, versus 0.0% previous.
Canada’s Manufacturing PMI for June 2017 – Forecast 55.0, versus 55.1 previous.
During the downside wave, the pair broke two important bullish trend lines near 0.8800 on the 4-hours chart.The pair also cleared the 50% Fib retracement level of the last wave from the 0.8719 low to 0.8880 high. It has opened the doors for more losses below 0.8780 since the pair is now below the 100 SMA (H4).The next major support is around the 200 SMA (H4) at 0.8732, followed by the last swing low of 0.8720. On the upside, the 0.8800 handle may now act as a resistance and prevent gains in the short term.
The report stated that: