Remains vulnerable below the 0.9050 confluence region

• EUR / GBP has struggled to capitalize on its attempted recovery move to the 0.9050 region.
• The setup favors the bears and supports the outlook for further weakness in the short term.
• Any significant positive move to the upside could be seen as a selling opportunity and remain limited.

The EUR / GBP cross has moved with a slight positive bias at the start of the European session on Wednesday, although it has lacked a strong continuation buy. The rise has remained limited near 0.9050, an important confluence zone.

The mentioned region comprises an uptrend line of more than three weeks and the 50% Fibonacci retracement of the recent strong positive move from 0.8867 to 0.9230. This, in turn, should now act as a key point for intraday investors.

Renewed optimism that the UK will strike a Brexit deal has continued to prop up the British pound and limited the EUR / GBP recovery attempt. That said, some subsequent purchases above 0.9050 could trigger a short coverage bounce.

The EUR / GBP cross could rise again towards the 38.2% Fibonacci retracement and aim to regain the round 0.9100 level. Any further strength could still be seen as a selling opportunity and disappear near the 0.9115-20 horizontal zone.

Meanwhile, technical indicators on the daily chart have been losing positive momentum, while gaining bearish traction on the 1 hour charts. The setup supports prospects for an extension of the corrective slide from the nearly two-month highs set last Friday.

The EUR / GBP cross looks vulnerable to challenge the key psychological 0.9000 level, which coincides with the 61.8% Fibonacci retracement. This is closely followed by the very important 200-day SMA near the 0.8985 region.

A sustained break below this region should pave the way for a further short-term bearish move towards the round 0.8900 level. The downward move could extend further towards the strong horizontal support at 0.8865-60.

EUR / GBP 4-hour chart

EUR / GBP technical levels