Key Highlights
- The Euro recovered recently, but failed to clear the 0.8650 resistance against the British Pound.
- A crucial bearish trend line is formed with resistance at 0.8620 on the 4-hour chart of EUR/GBP.
- The US Durable Goods Orders increased 0.4% in Jan 2019, better than the -0.5% forecast.
- The German CPI for Feb 2019 will be released today, which could increase 0.5% (MoM).
EURGBP Technical Analysis
The Euro started a solid rebound after trading as low as 0.8474 against the British Pound. The EUR/GBP pair climbed above the 0.8600 resistance, but it failed to gain strength above 0.8650.
Looking at the 4-hours chart, the pair struggled on two occasions near the 0.8650-0.8660 resistance area. Besides, the 100 simple moving average (red, 4-hours) also acted as a strong resistance near the 0.8650 level.
More importantly, there is a crucial bearish trend line formed with resistance at 0.8620 on the same chart. The recent high was formed near the 0.8656 level and the pair declined below the 38.2% Fib retracement level of the last wave from the 0.8474 low to 0.8656 high.
The current price action is bearish, suggesting more losses in EUR/GBP as long as the pair is below 0.8650 and 0.8660. A successful close above 0.8660 could open the doors for an acceleration to 0.8700.
On the downside, the main support is at 0.8530, below which the pair will likely decline below 0.8500 and 0.8480 in the near term.
Fundamentally, the US Durable Goods Orders report for Jan 2019 was released by the US Census Bureau. The market was looking for a 0.5% decline in orders in Jan 2019, compared with the last +1.2%.
The result was better than the forecast as there was an increase of 0.4% in the US Durable Goods Orders. Besides, the last reading was revised up from +1.2% to +1.3%. On the other hand, the US Durable Goods Orders ex Transportation declined 0.1%, whereas the market was looking for a 0.1% rise.
The report added that:
Excluding defense, new orders increased 0.7 percent. Transportation equipment, up five of the last six months, drove the increase, $1.0 billion or 1.2 percent to $90.9 billion.
The US Dollar failed to gain traction after the release and pairs such as EUR/GBP, GBP/USD and AUD/USD rebounded nicely, with a bullish angle.
Economic Releases to Watch Today
- German Consumer Price Index for Feb 2019 (YoY) – Forecast +1.6%, versus +1.6% previous.
- German Consumer Price Index for Feb 2019 (MoM) – Forecast +0.5%, versus +0.5% previous.
- US Import Price Index Feb 2019 (MoM) – Forecast +0.3%, versus -0.5% previous.
- US Export Price Index Feb 2019 (MoM) – Forecast +0.1%, versus -0.6% previous.
- US Initial Jobless Claims – Forecast 225K, versus 223K previous.
