Key Highlights
- The Euro faced a lot of selling interest near 0.8780-90 against the British Pound and declined.
- There are two crucial bearish trend lines forming with resistance near 0.8770 on the 4-hours chart of EUR/GBP.
- The UK Manufacturing PMI in March 2018 increased from the last revised reading of 55.0 to 55.1.
- Today, the Euro Zone CPI report for March 2018 (Prelim) will be released, which is forecasted to increase by 1.4% (YoY).
EURGBP Technical Analysis
The Euro corrected higher from the 0.8667 low against the British Pound towards 0.8780. The EUR/GBP pair faced a major resistance near the 0.8780-90 zone and failed to move further higher.
Looking at the 4-hours chart, there are two crucial bearish trend lines forming with resistance near 0.8770. These trend line prevented gains on many occasions and they recently stopped the upside move above 0.8785.
The pair is currently moving lower and is trading below the 50% Fib retracement level of the last wave from the 0.8667 low to 0.8797 high. It is placed well below the 100 (red) and 200 (green) simple moving averages (4-hours), which is a negative sign.
If the pair fails to move above the trend lines and resistance at 0.8780, there could be more declines. It could even break the 61.8% Fib retracement level of the last wave from the 0.8667 low to 0.8797 high at 0.8716.
Below 0.8716, the pair may perhaps break 0.8700 for further losses. On the upside, a break above the trend lines, 0.8780, and the 100 SMA could open the doors more gains above 0.8800.
Recently, the UK’s Manufacturing PMI for March 2018 was released by Markit/CIPS. The market was positioned for a decline from the last reading of 55.2 to 54.8.
However, the result was slightly positive as the PMI increased from the last revised reading of 55.0 to 55.1. Commenting on the same, the Director at IHS Markit, Rob Dobson, stated:
The latest PMI survey provided further evidence that UK manufacturing has entered a softer growth phase so far this year. Although the pace of output expansion ticked higher in March, which is especially encouraging given the heavy snowfall during the month, this was offset by slower increases in new orders and employment.
Overall, the result was positive and helped the British Pound. Thus, if the EUR/GBP pair fails to move higher, there could be more downsides in the near term.
Economic Releases to Watch Today
- Euro Zone CPI for March 2018 (YoY) (Prelim) – Forecast +1.4%, versus +1.1% previous.
- Euro Zone Core CPI for March 2018 (YoY) (Prelim) – Forecast +1.1%, versus +1.0% previous.
- UK Construction PMI for March 2018 – Forecast 50.8, versus 51.4 previous.
- US ADP Employment Change March 2018 – Forecast 208K, versus 235K previous.
- US Services PMI for March 2018 – Forecast 54.3, versus 54.1 previous.
