The Euro has maintained a bearish trajectory since mid-November, with price action currently pinned near the 0.8650 support zone. This comes after the pair failed to clear the 0.8700 resistance level earlier this week. The Euro has been weighed down by high shop price inflation in the UK and growing speculation regarding further ECB easing.
While better-than-expected German GDP data on Friday offered a brief reprieve, market participants remain cautious. Investors are looking ahead to broader Eurozone GDP figures and German inflation data to verify if the economic recovery is sustainable. From a technical standpoint, the EUR/GBP is currently hovering at the neckline of a bearish Head & Shoulders pattern.
The EUR/GBP is currently trading at 0.8670 on the daily chart, hovering just above the neckline of a significant Head & Shoulders formation at 0.8650. Bearish sentiment is reinforced by technical indicators; the MACD remains flat near the zero line, while the RSI continues to linger in bearish territory, failing to reclaim the neutral 50 level.
A decisive break below 0.8650—a level that has repeatedly provided support throughout January—could attract further selling pressure. This would likely target the mid-August lows near 0.8600, with a secondary objective at the late June lows around 0.8515. On the upside, immediate resistance is found at the 0.8700–0.8710 zone, followed by the January 21 peak of 0.8745.