EUR/GBP Technical Analysis: Euro at Risk of Deeper Losses (31/08/15)
The Euro declined for a fourth consecutive day against the British Pound, with a break below chart support seemingly opening the door for further weakness. The pair found a top near the 0.74 figure after retesting resistance marked by early June swing highs.
Sellers aim to challenge the 38.2% Fibonacci expansion at 0.7210 from here, with a break below that on a daily closing basis exposing the 50% level at 0.7145. The 23.6% Fib at 0.7291 has been recast as near-term resistance. A move back above this threshold clears the way for another challenge of the June 4 high at 0.7385.
Entering short is a tempting proposition from a purely technical perspective, particularly after an intraday rebound following the bearish break brought prices upward to retest support-turned-resistance. We will tactically opt to stand side however. The Euro has found strength in risk aversion recently, and a busy week laden with top-tier news-flow threatens to unleash more of the same in the days ahead. With that in mind, we will opt against committing to a directional bias for the time being.