EUR/GBP Chartpack - Technicals, Fundamentals & Hedging Setup
EUR/GBP bulls break out channel resistance, major trend edges up in range – Long hedge ahead of ECB’s monetary policy:
EURGBP bulls seem to be on upper hand as the current prices are nudged above channel resistance and with momentum still in bull mode there is room to test the next resistance region between 0.8895 and 0.8925 levels.
Next stiff resistance levels are observed at 0.8975 levels. However, it is quite tough for the markets to push up through that region as the momentum approaching overbought zone, if any failure swings are seen, then we expect a pullback from there.
A decline through 0.8900-0.8870 support is needed to suggest a more significant turn back into the range around 0.8800 and potentially a re-test of the 0.8720-0.8690 range lows.
For now, the greater risk is to merely range at these upper levels. Long term, we still cannot rule out a retest of the 2008 highs at 0.9802.
However, the risks of that decrease the longer we remain within this medium-term range under 0.9300-0.9710. A decline through 0.8250 key support would negate upside risks and suggest a move back to 0.8000 and then 0.7500.
On a broader perspective, the current prices spike above 7EMA and go non-directional (refer weekly chart), leading oscillators are bullish bias and the lagging indicators indecisive but mildly bullish.
ECB is scheduled for this week for its monetary policy (on Wednesday). The Eurozone PMI July prints and German IFO surveys give judicious indications but are unlikely to point to a marked acceleration in economic activity. These factors point to the need for caution by the European Central Bank in running down its stimulus programme. At its last policy meeting, the ECB indicated that it would end its net bond purchases after December and would probably start raising interest rates at the end of next summer. Since then, at least some ECB policymakers have indicated that growing confidence in inflation’s return to the target may justify an earlier hike in rates.
Nevertheless, the comparatively subdued growth point of view tips-off in the reverse direction. This implies that ECB President Draghi finds it tricky balancing act during his post-meeting comments.
The ECB is unlikely to shift its policy proposals at this stage but Draghi will probably emphasize that they need to proceed cautiously and that their actions will ultimately be driven by how economic growth and inflation evolves. Courtesy: Lloyds
On hedging grounds, we advocate initiating longs in EURGBP futures contracts with a view to arresting further upside risks.
Currency Strength Index: FxWirePro's hourly EUR spot index is at shy above -21 levels (which is bearish), while hourly GBP spot index is edging higher at -85 levels (bullish) while articulating (at 06:17 GMT).
EURGBP bulls seem to be on upper hand as the current prices are nudged above channel resistance and with momentum still in bull mode there is room to test the next resistance region between 0.8895 and 0.8925 levels.
Next stiff resistance levels are observed at 0.8975 levels. However, it is quite tough for the markets to push up through that region as the momentum approaching overbought zone, if any failure swings are seen, then we expect a pullback from there.
A decline through 0.8900-0.8870 support is needed to suggest a more significant turn back into the range around 0.8800 and potentially a re-test of the 0.8720-0.8690 range lows.
For now, the greater risk is to merely range at these upper levels. Long term, we still cannot rule out a retest of the 2008 highs at 0.9802.
However, the risks of that decrease the longer we remain within this medium-term range under 0.9300-0.9710. A decline through 0.8250 key support would negate upside risks and suggest a move back to 0.8000 and then 0.7500.
On a broader perspective, the current prices spike above 7EMA and go non-directional (refer weekly chart), leading oscillators are bullish bias and the lagging indicators indecisive but mildly bullish.
ECB is scheduled for this week for its monetary policy (on Wednesday). The Eurozone PMI July prints and German IFO surveys give judicious indications but are unlikely to point to a marked acceleration in economic activity. These factors point to the need for caution by the European Central Bank in running down its stimulus programme. At its last policy meeting, the ECB indicated that it would end its net bond purchases after December and would probably start raising interest rates at the end of next summer. Since then, at least some ECB policymakers have indicated that growing confidence in inflation’s return to the target may justify an earlier hike in rates.
Nevertheless, the comparatively subdued growth point of view tips-off in the reverse direction. This implies that ECB President Draghi finds it tricky balancing act during his post-meeting comments.
The ECB is unlikely to shift its policy proposals at this stage but Draghi will probably emphasize that they need to proceed cautiously and that their actions will ultimately be driven by how economic growth and inflation evolves. Courtesy: Lloyds
On hedging grounds, we advocate initiating longs in EURGBP futures contracts with a view to arresting further upside risks.
Currency Strength Index: FxWirePro's hourly EUR spot index is at shy above -21 levels (which is bearish), while hourly GBP spot index is edging higher at -85 levels (bullish) while articulating (at 06:17 GMT).