BUZZ-COMMENT-Euro faces big tests with major levels on the horizon
Reuters · 01/29 10:52
BUZZ-COMMENT-Euro faces big tests with major levels on the horizon

- The euro has fallen 2.8% versus sterling since November and could quickly lose another 1.5-2.0% if major support points give way.

EUR/GBP completed a five-week uninterrupted bear run last week and the trend draws support from a falling weekly RSI and increasingly momentum readings.

Fibonacci retracement levels, taken off the significant 0.8204-0.9260 March 2022 to Sept. 2022 climb, have been removed. The 76.4% Fibonacci of that move provides a bear target at 0.8453. The August 2023 0.8493 low is looming large as the cross drops to 0.8520 Monday.

The monthly chart has a significant bear signal and a major support and potential trigger point too far from market. A bearish engulfing candle for January, where a large real body completely engulfs a smaller and bullish December candle, strengthens the bear call. The 200-month moving average is at 0.8402. The average has supported the euro since Jan. 2016 and a test would equate to a 1.5% drop.

A 2.0% fall from the Monday low would take EUR/GBP close to another significant level, the low from Aug. 5, 2023, at 0.8341.

A potential end point for the current EUR/GBP bear trend could be the 0.8204 low from March 2022.

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(Peter Stoneham is a Reuters market analyst. The views expressed are his own)