EUR/GBP Treads Water Ahead Of ECB

Just hours away from this month’s ECB meeting, EUR/GBP is consolidating below a key zone of resistance.

There are some expectations for ECB staff to lower their projections after a slew of weak data, and rates are expected to remain on hold. However, the level of dovishness is likely to be deciding factor of how Euro crosses change in the aftermath, as failure to provide such a dovish meeting could send the Euro broadly higher. Still, we note EUR/GBP is stuck below a key zone of support, which itself could provide a pivotal area for bull or bears. Technically our bias favours further downside (eventually) based on monthly price action.  

A monthly close beneath 0.8620 reaffirmed our bias that a longer-term top could be playing out on EUR/GBP. January’s bearish engulfing candle marks a lower high at 0.9116 and, as the most volatile months have been bearish since the 2017 high at 0.9306, we suspect there is further downside to come. With the nearest structural low sitting at 0.8313, this leaves a around 250 pips of potential downside if it can break beneath the 50-week eMA in due course.




Switching to the daily chart shows that prices are trying to consolidate beneath the 0.8620 low. A bearish pinbar marks a swing high around 0.8646, and we’ve seen a hanging man reversal and second bearish hammer to show a hesitancy to break higher. The 50 and 20-day eMA’s both point lower, with the latter capping as resistance along with a 38.2% Fibonacci level. These levels place a zone of resistance around 0.8620-0.8650, which we’d prefer to see hold to retain the near-term bearish bias. We could wait for a break of the 0.8529 before assuming further downside, but for extra confirmation we’d want to see it break the 50-week eMA around 0.8517.


Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.