EURGBP, H4
Today, the dollar saw fresh highs versus the euro, which remained under general pressure, and remained generally underpinned against most other currencies. The euro is presently showing a 0.3% loss versus the dollar, a 0.4% decline versus sterling and a 0.1% fall in the case against the yen. The declines built on losses seen after yesterday’s Reuters report that the ECB is not intending to shift out of its prevailing dovish guidance at next month’s policy meeting. This message has been backed up by ECB officials today pushed back against rate hike speculation with Praet, Nowotny and Liikanen all effectively confirming that the dovish guidance remains in place.
A combo of ECB-speak and Eurozone data maintained pressure on the common currency with weaker than expected ESI confidence data and German inflation dropping sharply in March. After Spanish headline HICP already came in weaker than anticipated, the German headline rates also dropped much more than anticipated and the HICP rate now stands at just 1.5% y/y, pulling back from 2.2% y/y in February.
Euro weakness after Eurozone data, drifted EURGBP pair to last week lows at 0.8609. In the 4-hour chart, the pair broke the significant 200 EMA earlier, while a break of the lower Bollinger band indicates a further weakness. Currently the pair traded at 0.8616 hence a break of the lower Bollinger bands is possible to drive the pair near to 50.0 Fibonacci level at 0.8570-0.8590 area. Additionally, the turn of Parabolic SAR yesterday and the fact that RSI is at 37 sloping down, confirms the signs of further weakness for EURGBP. However in long term basis, pound still consider to be risky due to the long divorcing process commences.
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Andria Pichidi
Market Analyst
HotForex
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