EUR/GBP Drops Below 0.7700 ahead of German ZEW Sentiment

EUR/GBP Drops Below 0.7700 ahead of German ZEW Sentiment

24 May 2016, 10:02
Roberto Jacobs
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EUR/GBP Drops Below 0.7700 ahead of German ZEW Sentiment

The relative under-performance of the shared currency (EUR) against the British Pound (GBP) has now dragged the EUR/GBP pair back below 0.7700 handle just ahead of German ZEW economic sentiment index reading for the month of May.

The pair on Tuesday reversed all of its nominal gains recorded on Monday and has now dropped back below 0.7700 round figure mark. Of late receding worries over 'Brexit', coupled with improvement in the UK economic data, had been key supportive pillars for the British Pound's recent strength.

Last week, the EUR/GBP pair witnessed a rebound from a multi-month low level touched on Thursday and the momentum got spilled-over on Monday, with the pair climbing to 0.7750 level. The pair, however, has broken through important support levels and hence any pull-back would be looked upon as selling opportunities by traders. On Tuesday, the pair resumed its downward trajectory and has now moved within striking distance of 0.7700 round figure mark.

Technical levels to watch

Below 0.7700 handle, the pair seems vulnerable to drop back towards retesting last week's daily closing lows support near 0.7665-60 area, which if broken would turn the pair vulnerable to extend its down-slide further towards 0.7600 round figure mark support.

Meanwhile on the upside, yesterday's high near 0.7750 level followed by an important support confluence break-point near 0.7885 level now seems to act as immediate resistance levels on the upside. Only a decisive strength back above 0.7885 support turned resistance area might negate the near-term bearish bias and open room for further recovery for the pair.


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