EUR / GBP falls below 0.9000 to hit eight week lows

• EUR / GBP falls to eight week lows below 0.9000.
• A dovish ECB and COVID-19 have sent the euro down 0.8% this week.
• The pair is testing an important support level at 0.9000.

The euro has extended its decline from week highs near 0.9100, hitting levels below 0.9000 for the first time in nearly two months. The rise in COVID-19 cases in Europe and measures to address them have hit the euro against a somewhat stronger pound this week.

Euro destroyed by the ECB and COVID-19

The common currency is trading lower against the British pound for the second day in a row on Friday and is set for a 0.85% weekly decline. Investor concerns about the impact of the new lockdowns introduced in France and Germany and the regional lockdowns in Spain on a fragile economic recovery have hit the euro this week.

Apart from that, the dovish message from the European Central Bank on Thursday, signaling the introduction of new stimulus measures in December, has increased selling pressure on the euro.

On the contrary, the pound has remained quite strong this week, helped by the absence of news about Brexit. The reopening of talks this week, with the EU targeting a deal by mid-November, has eased fears of a “hard Brexit” that has boosted the British pound.

EUR / GBP flirting with a major support level at 0.9000

From a technical perspective, the euro is declining from the base of the trading range of the last few weeks, at the psychological level of 0.9000. A successful breakout of this level could increase the downward pressure towards 0.8911 (61.8% Fibonacci retracement of the May-September rally) before testing the September lows at 0.8865.

On the upside, a bullish reaction should extend beyond the 0.9100 downtrend line resistance to nullify the downtrend, and later extend to 0.9145 (Oct 20 high) and 0.9220 (Sept 23 high). ).