EUR/GBP drops below the 20-day EMA, aiming to extend the downtrend towards 0.8700.If the EUR/GBP breaks below 0.8744, it will expose crucial supports at around 0.8736, 0.8700, and the S3 pivot at 0.8671.The EUR/GBP is on the defensive, dropping for the first time in the last six days amid a risk-on impulse weighing on the shared currency. At the time of writing, the EUR/GBP is trading at 0.8756, below its opening price, after hitting a daily high of 0.8807.
EUR/GBP Price Forecast
The EUR/GBP daily chart shows the pair faced solid resistance at the 20-day EMA at 0.8783, which was briefly broken, though, the pair retreated, and it’s trading at around October 10 lows. Therefore, the EUR/GBP is range-bound, with price action contained between the high/low of yesterday, but as it printed a fresh 3-day low, the path of least resistance is downwards. A break below 0.8744 could tumble the pair towards 0.8725, ahead of the 0.8700 mark.
The one-hour time frame illustrates the EUR/GBP as range-bound, even though price action it’s below the 20, 50, 100, and 200-EMAs, with all trapped in the 0.8760-0.8777 range. Traders should be aware that even though the Relative Strength Index (RSI) is below the 50-midline unless the EUR/GBP decisively breaks below 0.8736, October 7 daily low, it would likely remain subdued.
If the above scenario plays out, the EUR/GBP next support would be 0.8700, followed by the S3 daily pivot at 0.8671.
EUR/USD holds above 0.9700 as US stocks rebound
EUR/USD has recovered modestly after having declined to the 0.9700 area in the early American session. Wall Street’s main indexes rebounded from opening lows and US Treasury bond yield started to edge lower, making it difficult for the dollar to preserve its strength.
GBP/USD plummets on BOE Bailey’s words
GBP/USD nears the 1.1000 threshold after BOE Governor Bailey hit the wires and noted the central bank will be out of the market by the end of the week, halting the recent intervention to stabilize the financial system.
Gold benefiting from softer Treasury yields
XAUUSD bounces from a critical Fibonacci level, but further gains are unclear. XAUUSD is up on Tuesday as market players choose to drop the American currency during US trading hours. Easing yields after Wall Street’s opening bell undermined demand for the safe-haven USD.