The EURGBP Remains in Clear Downtrend under Pressure02 July, 2015 by Aayush Jindal in Market Analysis
- Euro continued to weaken not only against the US Dollar, but also currencies such as the British Pound.
- EURGBP is under pressure and remains at risk of more declines in the near term.
- Today, the UK Construction PMI will be released by the Chartered Institute of Purchasing & Supply and Markit Economics, which might impact the EURGBP pair.
- In Japan, the Foreign investment in Japan stocks came in at ¥298.2B compared with the last revised reading of ¥-253.3B.
EURGBP Technical Analysis
The Euro climbed towards the 0.7160-80 resistance area against the British Pound recently, but failed to maintain gains. The EURGBP pair is now moving lower, and it looks like it might continue to head lower. There is a descending channel formed on the hourly chart, which is acting as a catalyst for the pair. The pair recently tested the 61.8% Fib retracement level of the last wave from the 0.6989 low to 0.7166 high where buyers managed to defend the downside.
However, there is a major aspect to note, as the pair is below the 100 and 200 simple moving averages, which are aligned around the channel resistance trend line. So, there is a possibility that the pair might struggle in the short term and trade lower. Furthermore, on the upside the 0.7100 level remains a major resistance zone.
The hourly RSI is below the 50 level, which is a bearish sign. On the downside, the channel support area holds the key for more downsides. A break below it might take the pair towards the last swing low of 0.7000.
UK Construction PMI
Today during the London session, the UK Construction PMI that shows business conditions in the UK construction sector will be released by the Chartered Institute of Purchasing & Supply and Markit Economics. The forecast is lined up for an increase from 55.9 to 56.5 in May 2015.
A better than expected data might put a lot of pressure on the EURGBP, and it could turn lower in the short term.
Japanese Foreign investment
Earlier during the Asian session, the Japanese Foreign investment in Japan stocks report, which referrers to bonds issued in a domestic market by a foreign entity in the domestic market’s currency was released by Ministry of Finance. It registered a reading of ¥298.2B compared with the last revised reading of ¥-253.3B.