EUR / GBP capped below the 21-day SMA near 0.8650

• The EUR / GBP has been choppy on Tuesday, oscillating between 0.8560 and 0.8640 and vice versa.
• The 21-day SMA at 0.8620 appears to provide crucial resistance.
• Concerns about the launch of the vaccine in the eurozone likely encouraged bears to sell off the initial move for the session.

It has been a very hectic session for him. EUR/GBP. At the start of the European session on Tuesday, the crossing has risen from the 0.8580 region of the Asian session to new highs of more than a week at 0.8640, above the 21-day moving average at 0.8626. However, as quickly as the rally took place, the EUR / GBP it has sunk lower again and is now trading in the region daily lows near 0.8560.

With the technical selling at the 21-day SMA seemingly gaining (the 21 SMA has acted as a solid resistance so far in 2021), the bears are now back in control, so investors will be looking to see if the EUR / GBP can test last week’s lows near 0.8550. A break from these lows would open the prospect of a break from the lows at the end of last month of just under 0.8540, below which the pair would return to multi-month lows.

The initial strength of the euro appears to have been exacerbated by a stronger-than-anticipated German ZEW survey.. German ZEW economic sentiment rose to 76.6 points in March from 71.2 in February, a larger jump than the expected rise to 74.0. Similarly, current conditions saw a larger jump than expected, climbing to -61 from -67.2, although this is still well below pre-pandemic levels, which is not surprising given that Germany has been stuck in various degrees of blockage so far this year. ZEW commented that while the second lockdown has halted the recovery, its data does not suggest that there will be as drastic a drop in GDP in Q1 2021 as was experienced in the second quarter 2020 lockdown.

At the same time, at the start of the European session, the pound sterling was under pressure, although there were no specific news or issues driving the weakness. But things have changed since then, with the GBP rebounding and the EUR falling, hence the change in the EUR / GBP.

Long-term EUR / GBP bears have likely seen Tuesday’s rally as an opportunity to increase short positions. and it seems that this operation is already bearing fruit. Market analysts attribute the news to increased interruption to the launch of the vaccine in the euro zone as a negative for the pair. Most EU countries have now halted the launch of the AstraZeneca vaccine amid concerns that it could be linked to more cases of severe blood clotting.

However, the WHO, the UK health authorities and even the EU central health authority (the European Medicines Agency or EMA) have insisted that the vaccine is indeed safe and that the links to blood clots are nothing more than a false correlation at best and worst case against vaccines. The EMA is conducting an investigation and will release the results on Thursday, but is expected to give the go-ahead for the vaccine.

This is bearish for the EUR / GBP as the launch of the vaccine in the EU is already far behind the UK. And with the rise of Covid-19 infections on the continent, Europeans must speed up the launch of the vaccine more than ever if they want to reopen their economies during the summer. Vaccine vacillation, particularly against the AstraZeneca vaccine, has slowed the launch and there has been a lot of news in recent weeks of AstraZeneca vaccines just in storage. The latest moves by EU countries are likely to further damage confidence in the safety of the vaccine, further slowing the region’s launch and putting its economic recovery further and further behind that of the United Kingdom (whose launch of the vaccine will be accelerated in the coming weeks).

Looking ahead, Thursday is the next big day of events that will move the EUR / GBP market as the Bank of England will release the results of its latest monetary policy decision, as well as updated economic forecasts. Meanwhile, ECB President Christine Lagarde will also speak.

EUR / GBP technical levels