The EUR/GBP continues to decrease on the short term after has touched a major horizontal resistance, the price is now pressuring a notable dynamic support, remains to see if this support level will have the power to stop the bearish momentum. The price has decreased as the Euro was too overbought to be able to stay higher, the European currency has decreased versus all its counterparts in the last period.
The currency pair has moved little in yesterday’s trading session even if we had the ECB Press Conference, the ECB has published also the Minimum Bid Rate, the rate remains on hold at 0.00%. The European Central Bank didn’t make any changed to the monetary policy, but personally I’m expecting to see further easing in the coming period because I don’t think that the current QE could boost the inflation.
The pair has decreased and now is challenging the median line (ML) of the ascending pitchfork, actually we have a confluence here at the intersection of the 50% retracement level with the median line, any drop below this confluence zone will open the door for more declines, the next downside target is at the 50% Fibonacci line and lower at the 38.2% retracement level. The currency traders are wondering if the correction phase has ended at the 61.8% retracement level and now the price will decrease again and will resume the long term downward movement.
This bearish movement was expected after the failure to jump above the 61.8% retracement level, the price was expected to come to retest the median line because has run out of energy and has failed to reach the upper median line (UML) of the ascending pitchfork, the pair could break through the median line as the Pound remains firm on the short term.
Only a rejection here could drive the price higher again because if the price falls below the median line and below the 50% retracement level, than a broader retreat follows.
The Euro could rebound versus the Cable and versus its rivals only if the Euro-zone economic data will support the EUR, the economic calendar is filled with high impact economic that could bring high action on the EUR/GBP. The Euro-zone Flash Manufacturing PMI is expected to increase from 51.6 to 51.8 points, signalling further expansion, moreover the Flash Services PMI could increase from 53.1 to 53.3 points, the services sector could continue the expansion after a little slowdown.
Markit is to release also the manufacturing and services reports from French and Germany, the Euro could increase again if the data will come in line with expectations, the predictions are signalling some improvement in the manufacturing and services sectors.
You can see on the H4 chart that the price has slipped below the 50% retracement level and below the median line as the price is trapped below the short downtrend line, but the price could find strong support on the minor median line (ml) of the short term descending pitchfork and could rebound from there if the Euro-zone data will boost the Euro, otherwise the price will fall further with the next downside target at the 50% Fibonacci line (ascending dotted line).