- EUR/GBP lost more than 1% on the week.
- US equities continue to rise, but sentiment will turn cautious on the FOMC decision.
- EUR/GBP Price Analysis: In the long and short term, it has moved lower.
The EUR/GBP falls for four days in a row and on its way south breaks below the 100 and 200 day EMAs, changing the pair’s bias to the downside as it tests the 13 Jul low at 0.8403 amid a state of positive market sentiment. At the time of writing, the EUR/GBP is trading at 0.8403.
The mood of market agents remains positive pending the decision of the US FOMC. Despite a gloomy scenario with high inflation, recession fears albeit subdued but still lingering in traders’ minds, and slowing economic growth, US equities are rising. In the case of EUR/GBP, the worsening of the EU energy crisis has boosted the pound.
EUR/GBP Price Analysis: Technical Outlook
From a daily chart point of view, the EUR/GBP pair turned down once it fell below the 50 and 200 day EMAs. Additionally, the Relative Strength Index (RSI) dipped into bearish territory, prompting sellers to add to their positions, which piled up around weekly highs at 0.8500, sending the cross down 100 pips. Unless the EUR/GBP buyers retake the 200 day EMA at 0.8439, the sellers are in command. Therefore, the first support for the EUR/GBP would be the 0.8400 figure. Once cleared, the cross could drop towards the May 17 low at 0.8394, followed by the May 2 daily low at 0.8367.
EUR/GBP 1 hour chart
The EUR/GBP 1 hour chart shows that the pair is consolidating around the 0.8400-20 range, but the bias is bearish. Also, the exchange rate is below its hourly EMAs, along with the Relative Strength Index (RSI) below its 7-period SMA, so sellers are in control. Therefore, the first support for the EUR/GBP would be the 0.8400 level. If it breaks below, the May 17 low at 0.8394 will be seen, followed by the S1 daily pivot at 0.8378, and the May 2 low at 0.8367.
Source: Fx Street
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