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16 Sep 2013
EUR/GBP very confined even after solid CPI data
FXstreet.com (Athens)- The EUR/GBP is trading at a very tight range today lacking trend momentum.
EUR/GBP still under heavy congestion after Draghi comments, CPI release
The EUR/GBP is trading very close to its opening on Sunday, even after CPI Euro zone data came out in line with the estimations. Taken for granted that the ECB’s forward guidance strategy makes it unlikely higher inflation data will provoke higher interest rates, inflation is often a sign of accelerating growth prospects and should be viewed as positive for the Euro. Still the 1.3% reading that released earlier, was in broader line with the estimations, showing a sign of improving underlying growth fundamentals. However, while not a dismal release, is a reading well below the 2% inflation target of the ECB, therefore this might be a reason that the cross didn’t move much. Elsewhere, both ECB’s Merch and Praets, comments suggesting that “Europe is lagging in the global recovery cycle” and “Eurozone recovery is still fragile and monetary policy aims at remaining accommodative,” may put more pressure on the common currency.
Technical Outllook on EUR/GBP
Karen Jones, Head Technical Analyst at Commerzbank suggests that the EUR/GBP “is under pressure, but should find some support circa 0.8350. Also, EUR/GBP again sold off sharply, which has somewhat negated our fears over a rebound. The market has started to erode its 55 week ma at .8374 and despite the TD perfected set up and 13 count clearly remains vulnerable on the downside. The intraday charts indicate that this move should terminate circa .8350. Any rebounds will find initial resistance offered by the June low at .8470, the 200 day ma at .8497 and stronger resistance at .8515, the 38.2% Fibonacci retracement of the recent decline. Longer term the market has reversed from the top of a 4 year channel and longer term downside targets .8280/.8155/.7980 have been introduced (Fibonacci retracements of the move up from 2012)
EUR/GBP still under heavy congestion after Draghi comments, CPI release
The EUR/GBP is trading very close to its opening on Sunday, even after CPI Euro zone data came out in line with the estimations. Taken for granted that the ECB’s forward guidance strategy makes it unlikely higher inflation data will provoke higher interest rates, inflation is often a sign of accelerating growth prospects and should be viewed as positive for the Euro. Still the 1.3% reading that released earlier, was in broader line with the estimations, showing a sign of improving underlying growth fundamentals. However, while not a dismal release, is a reading well below the 2% inflation target of the ECB, therefore this might be a reason that the cross didn’t move much. Elsewhere, both ECB’s Merch and Praets, comments suggesting that “Europe is lagging in the global recovery cycle” and “Eurozone recovery is still fragile and monetary policy aims at remaining accommodative,” may put more pressure on the common currency.
Technical Outllook on EUR/GBP
Karen Jones, Head Technical Analyst at Commerzbank suggests that the EUR/GBP “is under pressure, but should find some support circa 0.8350. Also, EUR/GBP again sold off sharply, which has somewhat negated our fears over a rebound. The market has started to erode its 55 week ma at .8374 and despite the TD perfected set up and 13 count clearly remains vulnerable on the downside. The intraday charts indicate that this move should terminate circa .8350. Any rebounds will find initial resistance offered by the June low at .8470, the 200 day ma at .8497 and stronger resistance at .8515, the 38.2% Fibonacci retracement of the recent decline. Longer term the market has reversed from the top of a 4 year channel and longer term downside targets .8280/.8155/.7980 have been introduced (Fibonacci retracements of the move up from 2012)