Euro Taking It on the Chin a
EUR/GBP has been getting slammed all day
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With the DXY going bid most of the US session because of positive China-US trade talk headlines, it’s only natural for the EUR/USD to have sold off today. The Euro currently makes up about 57% of the US Dollar Index. Currently EUR/USD is down -.55% at 1.1066. With the DXY up +.41% on the day, one may expect GBP/USD to be lower as well. However, the pair is actually just about unchanged. Granted, Sterling makes up only about 12% of the DXY, however usually if EUR/USD were to move lower, the GBP/USD would follow suit. There were no major headlines today regarding Brexit, so that isn’t why GBP/USD is holding up. However, if EUR/USD is falling, and GBP/USD is unchanged, something has to give. The answer lies in the cross currency, EUR/GBP!
EUR/GBP has been getting slammed all day, which means the Euro is heading lower while the Pound is going higher. The cross currency is currently down nearly -.60% at .8685 (down 50 pips on the day). The pair formed a flag pattern on a daily timeframe during the month of September and halted its selloff from the break lower towards the flag target at .8488. The pair has been forming a symmetrical triangle since mid-October between .8580 and .8700 and is currently trading near the apex.
Source: Tradingview, City Index
On a 240-minute chart the symmetrical is clearer, and it looks as if EUR/GBP is trying to push through the lower trendline of the triangle. If this is the case, the target is close to .8400 (whereas the target from the flag on the daily is .8488.)
Source: Tradingview, City Index
Looking at the daily chart, there isn’t any support until the daily flag target, which is also lows from March and May, near .8475/.8500. To find support below there, we need to look at a weekly chart. The 38.2% retracement level from the lows of July 2015 to the highs in August 2019 is .8400 (which is also the target of the triangle on the 240-minute chart. Below there, horizontal support comes across at .8308.
Source: Tradingview, City Index
If EUR/GBP does manage to hold within the triangle and bounce, resistance would be at the top, downward sloping trendline from the triangle near .8640. Above that, there is horizontal resistance at .8715.
Brexit headlines are usually key for movements in EUR/GBP. However, with campaigning for elections ongoing, headlines may be sparse for a while, which may keep GBP/USD steady. As we see today though, movement may come via EUR/USD and China headlines!
With the DXY going bid most of the US session because of positive China-US trade talk headlines, it’s only natural for the EUR/USD to have sold off today. The Euro currently makes up about 57% of the US Dollar Index. Currently EUR/USD is down -.55% at 1.1066. With the DXY up +.41% on the day, one may expect GBP/USD to be lower as well. However, the pair is actually just about unchanged. Granted, Sterling makes up only about 12% of the DXY, however usually if EUR/USD were to move lower, the GBP/USD would follow suit. There were no major headlines today regarding Brexit, so that isn’t why GBP/USD is holding up. However, if EUR/USD is falling, and GBP/USD is unchanged, something has to give. The answer lies in the cross currency, EUR/GBP!
EUR/GBP has been getting slammed all day, which means the Euro is heading lower while the Pound is going higher. The cross currency is currently down nearly -.60% at .8685 (down 50 pips on the day). The pair formed a flag pattern on a daily timeframe during the month of September and halted its selloff from the break lower towards the flag target at .8488. The pair has been forming a symmetrical triangle since mid-October between .8580 and .8700 and is currently trading near the apex.
Source: Tradingview, FOREX.com
On a 240-minute chart the symmetrical is clearer, and it looks as if EUR/GBP is trying to push through the lower trendline of the triangle. If this is the case, the target is close to .8400 (whereas the target from the flag on the daily is .8488.)
Source: Tradingview, FOREX.com
Looking at the daily chart, there isn’t any support until the daily flag target, which is also lows from March and May, near .8475/.8500. To find support below there, we need to look at a weekly chart. The 38.2% retracement level from the lows of July 2015 to the highs in August 2019 is .8400 (which is also the target of the triangle on the 240-minute chart. Below there, horizontal support comes across at .8308.
Source: Tradingview, FOREX.com
If EUR/GBP does manage to hold within the triangle and bounce, resistance would be at the top, downward sloping trendline from the triangle near .8640. Above that, there is horizontal resistance at .8715.
Brexit headlines are usually key for movements in EUR/GBP. However, with campaigning for elections ongoing, headlines may be sparse for a while, which may keep GBP/USD steady. As we see today though, movement may come via EUR/USD and China headlines!
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