- EUR / GBP falls to fresh multi-month lows and challenges downtrend channel support.
- The oversold conditions on the daily chart warrant caution for aggressive bears.
- A sustained move above 0.8650 is needed to support the prospects for any significant bounce.
The EUR / GBP cross has moved lower during the first half of the European session on Tuesday and has fallen to the lowest level since March 2020, around the 0.8620 region. The aforementioned area marks the lower limit of a downtrend channel of more than a month, which should act as a key point for short-term investors.
Meanwhile, technical indicators on the daily chart already show extreme oversold conditions and warrant some caution before opening new bearish positions. This, in turn, supports the prospects for some short-term hedging movement. That being said, it will still be prudent to wait for some continuation buying above the 0.8650 region before positioning for any significant recovery.
Higher up, the EUR / GBP cross could aim to regain the round 0.8700 level. Any further positive movement is likely to remain limited near the trend channel resistance, currently around the 0.8715 region. Only a convincing breakout of this level will negate the bearish outlook and pave the way for a further short-term bullish move towards the 0.8790-0.8800 resistance zone.
On the other hand, bears are likely to wait for sustained weakness below trend channel support, currently near the 0.8625 region, before opening new positions. This would set the stage for a decline towards the March 2020 lows, around the 0.8595 region, en route to the 0.8535 zone and the next major support near the key psychological level of 0.8500.
EUR / GBP 4-hour chart
EUR / GBP technical levels
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