EUR/GBP upside move stalls but buyers remain in control

 

EUR/GBP trades 0.2% lower today after failing to break above 0.9100 overnight  

VIA : forexlive

The euro is under a little bit of pressure on the day as a report on Italy asking the ECB for a separate QE program is gaining some traction. Other currencies are more or less flat on the day - aside from the aussie which has its own problems - and that has seen EUR/GBP fall to trade near the lows currently.

The pair made a run up overnight in an attempt to move above the 0.9100 handle but fell just shy of testing the figure level. Resistance from the trendline highlighted above also helped to keep buyers in-check at the time.

However, despite the drop today, buyers are still in the driver's seat:

In the run higher over the past week-and-a-half, the hourly moving averages were very well-respected as key support levels. So, that gives added significance to any break below them. For now though, price continues to stay above both hourly moving averages and that continues to show that the near-term bias still favours buyers more.

There is some nearby support from yesterday's lows around 0.9057-59 but ultimately the key support level is the 100-hour MA (red line) @ 0.9046. That will be the real test for buyers if they are to retain the upside momentum.

Both the euro and pound have their fair share of political worries with Italy being the bane of the euro and Brexit still causing a headache for the pound. While it's almost certain now Brexit negotiations will be pushed back to November and December, there is still added uncertainty surrounding a no-deal outcome and that means the tail risk for the pound is much greater than the euro.

Although Italy's budget problems with the EU may be worrisome, so far it has been a more localised issue rather than a contagion one. And if you look at the euro from a trade-weighted perspective, there's a clear divergence over the past week that Italy's budget problems are so far not denting the euro's bullish prospects: