The Euro’s fate against the Pound hangs precariously in the balance, entangled in a web of mixed economic data and central bank whispers. Eurozone GDP, while narrowly avoiding a technical recession, revealed deep stagnation in France and Germany, raising concerns about future growth. This contrasts with Spain and Italy’s surprising resilience, fuelling market uncertainty.
Hawkish hints from some BoE officials add another layer of complexity. While a rate hike at Thursday’s meeting is unlikely, the mere possibility bolsters Sterling’s appeal. Meanwhile, dovish ECB rhetoric hinting at an April rate cut weighs heavily on the Euro. Global risk-off sentiment, fuelled by geopolitical jitters and economic slowdown fears, further muddies the waters.
Technical
The 4-hour chart shows that the currency pair currently trades at 0.85578, having defied initial bearish forecasts with a bullish surge following the economic data. The price action recently broke above the downward-sloping 20-SMA (green line) and 50-SMA (blue line) but remains firmly below the bearish 100-SMA (orange line).
A sharply rising RSI (59.89) hints at bullish momentum. Therefore, a break above the 50.00% Fibonacci retracement level could confirm the bullish charge, likely offering short-term trading opportunities towards the initial resistance at 61.80% Fibonacci retracement level (0.85779). A break above the golden ratio would bring the 0.85956 and 0.86181 resistance levels into play in the short term.
However, short-term trading opportunities could exist towards the support level at the 23.60% Fibonacci retracement level (0.85377) should a retracement below the 38.20% Fibonacci retracement level materialize. A decisive break below the initial support could confirm the bearish momentum, likely bringing the 0.85129 support level into play.
Summary
The EURGBP faces a critical juncture; its immediate path is dependent on economic developments, central bank decisions, and investor sentiment. While the recent bullish charge offers exciting short-term potential, the fundamental landscape remains treacherous.
Sources: TradingView, Trading Economics, Reuters, Dow Jones Newswire, European Commission.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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