Weakening Eurozone Data Keeping EUR/GBP Subdued
EUR/GBP has been bullish for about a year, but at the end of April we saw a bearish reversal. During the bullish period, the 200 SMA (purple) was acting as support on the daily chart. But now, that moving average has been broken which puts sellers in control.
Today this pair remained in a consolidation phase above the level of 0.8660, and the overall outlook remains the same as last week, so the initial bias for this week is neutral. However, further decline is anticipated as long as the resistance at 0.8758 holds. On the downside, a break of 0.8660 would lead to a resumption of the recent decline from 0.8977 to the projected target of 0.8614. Nevertheless, if the minor resistance at 0.8758 is broken, the bias will shift back to the upside, indicating a stronger rebound. But, we have a bearish bias for this pair, as the economic data continuesto show increasing weakness, hurting the consumer sentiment, which will weigh further ahead on the economy.
Euro Zone Consumer Confidence May 2023
Eurozone consumer confidence flash estimate
- Eurozone consumer confidence -17.4 points in May versus -16.8 estimate
- April consumer confidence was -17.5 points
European Central Bank President Lagarde spoke with Dutch media on Sunday, reiterating more hikes yet to come from the Bank.
- “I think we covered a large chunk of the journey toward taming inflation and bringing it back to our target,”
- “We are not done yet, we are not pausing based on the information I have today,”
- the “inflation outlook is too high and for too long.”
- “So many things can go wrong that we cannot give what we call forward guidance,”
- “I don’t have a predetermined number in my mind.”
EUR/GBP H4 Chart – The 50 SMA Keeping Sellers in Check
The 50 SMA is acting as resistance for this pair
On the H4 chart above, we see the steep reversal early this month, as the GBP turned bullish while the Euro turned bearish. The ECB has been pressing on rate hike comments, but the Euro seems to be ore dependant on the data. The 50 SMA (yellow) is acting as resistance here, so we will try to open a sell EUR/GBP signal soon.
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