- A strong pickup in demand for the euro led to hedging intraday shorts around EUR / GBP.
- A sustained move beyond the 200 hourly SMA was also considered a trigger for intraday bullish traders.
- Overbought RSI on the 1 hour chart, bearish oscillators on the daily chart warrant some caution.
The crossing EUR/GBP witnessed an aggressive short-hedging move on Tuesday and rallied to a week-long high around 0.8550 during the middle of the European session.
The shared currency got a strong boost following a Bloomberg report that the EU may hit its vaccination target much earlier than projected, in late June. Apart from this, the appearance of some selling around the British pound provided an additional boost to the EUR / GBP cross.
Looking at the technical picture, the extremely oversold RSI (14) on the daily chart turned out to be a key factor that helped the EUR / GBP cross to recover quickly from lows of more than a year. A sustained move past the 200 hourly simple moving average was considered another trigger for intraday bullish traders.
Meanwhile, the oscillators on the daily chart have rebounded from negative territory, but have yet to confirm a bullish bias. This makes it prudent to wait for some subsequent purchases before confirming that the EUR / GBP has bottomed out and positioning for future gains.
From current levels, a subsequent bullish move is likely to face some resistance near the 0.8575-80 region, above which the EUR / GBP cross could point to a 0.8600 rally. The next relevant release to the upside is pegged near the 0.8630 bid zone before 0.8650.
On the other hand, the 100 hourly SMA, currently around the 0.8530-25 region, now appears to protect the immediate drop. This is followed by the 0.8500 psychological level, which if broken could make the EUR / GBP cross vulnerable to resume its well-established downtrend.
Bearish traders could drag the EUR / GBP cross towards the 0.8470 region, or the lowest level since February 2020 touched in the previous session.
1 hour chart
Technical levels
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