- EUR / GBP regained positive traction on Tuesday and recovered some of the losses overnight.
- The setup appears tilted in favor of bullish traders and supports the prospects for additional earnings.
- A sustained break below the 0.8565 region is needed to negate the positive short-term outlook.
The crossing EUR/GBP it rose throughout the European session and updated the daily highs, around the 0.8635 region in the last hour. The momentum allowed the cross to recover some of the previous day’s losses to levels below 0.8600, or near two-week lows.
The aforementioned control marked a confluence region comprising the 100-period SMA on the 4-hour chart and the 50% Fibonacci level of the strong recovery move of 0.8472-0.8719 from the lows of more than a year. This should now act as a key point for short-term traders.
Meanwhile, the technical indicators on the daily chart, although they have been losing positive momentum, are still in positive territory. This, together with the emergence of some falling buying on Tuesday, supports the prospects for a further appreciation move in the short term.
From current levels, any subsequent positive movement could face resistance near the 0.8660 area, marking 23.6% of the Fibonacci level and confluence of the 50-period SMA. A sustained move further will reaffirm the constructive outlook and push the cross above 0.8700.
This is closely followed by the recent swing highs, around the 0.8715-20 region. Some subsequent purchases have the potential to lift the EUR / GBP cross into the 0.8740-50 bid zone, above which the bulls could aim to rebound 0.8800 for the first time since early February.
On the other hand, the 0.8600-0.8590 region now appears to have emerged as immediate strong support. A convincing break below will negate any positive short-term bias and make the EUR / GBP cross vulnerable to test the 61.8% Fibonacci level – support near the 0.8565 region.
Failure to defend the aforementioned support levels would expose the key psychological mark of 0.8500 before the EUR / GBP cross finally falls to challenge the yearly lows around the 0.8470 region.
4 hour chart
Technical levels
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