The euro is trading higher against the pound for the last couple of days. The pound traded lower yesterday, but the euro managed to hold the ground pretty well. As a result, the EUR/GBP pair was pushed higher above the 0.8320 level. The pair has breached an important down-move trend line, as can be seen in the daily chart below. I think the pair might continue to trade higher in the short term.
EUR/GBP Daily Chart" title="EUR/GBP Daily Chart" width="400" height="204">
Looking at the 4 hour chart of the EUR/GBP, there are critical support levels at around the 0.8300 area, as can be seen below. This support area also coincides with the broken trend line. Once the pair pushes a bit lower from the current levels to around this area, makes a stop and forms a bullish divergence, then we can jump into a buy trade.
EUR/GBP Daily Chart" title="EUR/GBP Daily Chart" width="400" height="204">
Alternatively, there is a channel forming on the hourly chart, as shown below. If the pair trades higher, and breaks this channel, then also we can enter into a buy trade.
EUR/GBP Hourly Chart" title="EUR/GBP Hourly Chart" width="400" height="204">
Initial target should be around the 0.8420 level, and final could be around the 0.8460 level. Stop should be placed below the 0.8260 level.
Market Recap
Yesterday, was mostly a ranging day, except for the pound. The GBPUSD pair was seen under pressure yesterday, as the pair traded lower towards the 1.6600 level. The pair has registered a healthy decline, and a nice bearish candle on the daily chart. There were no major economic releases in the US yesterday, which caused ranging moves in the market. Earlier in the European session, the Italian industrial production data was released, which came better than expected. This helped the EURUSD to stay above the critical 1.3850 support level in the short term.
Market Outlook
Today in the European session, the UK industrial and manufacturing production data will be published. The market is expecting a stable outcome. So, any miss in the outcome may weigh further on the GBPUSD. On the other hand, if the result is better than expected, then it might help the pair to regain some ground. Later, in the NY session, there are only a handful of low-risk events lined up, including the wholesale inventories and JOLTs jobs openings data. In the next Asian session, the Australia’s home loans data and Westpac consumer sentiment will be published. One can expect some movements around these events.