- EUR/GBP shows early attempts to rally but continues to struggle for sustained traction.
- Support near 0.8750 remains crucial, backed by prior resistance, recent tests, and the 50-day EMA.
- Broader bias still favors upside toward 0.89.
The Euro initially tried to rally a bit during the trading session here on Tuesday, but then gave back the gains as the Euro continues to struggle with traction. All things being equal, this is a market that I think eventually will try to find some support, and there is a very obvious place to look.
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0.8750 Continues to Matter
That is the 0.8750 level. That's an area that previously had been resistant, so it's worth looking at it through the prism of market memory. It has been tested a couple of times here in the last couple of weeks, and it has held quite nicely. We now see the 50-day EMA race toward it as well, so that's another reason to think that this could offer some support.
But with that, we will have to wait and see. The fact that we could not hang on to gains for the second or third day in a row really suggests a scenario where a little bit of a breather helps and offers enough value that people are willing to get involved in the market and start buying. In general, I do believe this is a market that will continue to be somewhat noisy, but it's also a market that still favors the upside as, although the Bank of England did not cut rates at the last meeting, they are getting very close to doing so, and that of course, means that we have to reprice the British pound itself.
Over the longer term, the 0.89 level is more likely than not to be your target based on the consolidation area that we just broke out of and its measured move. I have no interest in shorting this pair anytime soon.
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