IronFX - Analytics


373.50 5.25/10
54% of positive reviews

IronFX Essential Intraday Comment | 11/08/2015 EUR/GBP

• The dollar traded unchanged or lower against almost all of its G10 peers during the European morning Tuesday. It was lower against EUR, NOK, SEK, CAD and GBP, in that order, while it was unchanged against AUD, NZD and CHF. The greenback was higher vs JPY.

• EUR rallied as investors continued to unwind euro-funded positions against the yuan following China’s devaluation, and after comments that Greece is close to reaching an agreement with creditors over a new bailout package. The rally was halted however after the German ZEW survey for August showed a mixed picture for the bloc’s strongest economy. The expectations index declined once again from the previous month, while the moderate increase in the current situation index was not enough to reverse investors’ disappointment. Even though the Greek crisis seems to have stabilized, investors are still cautious over Germany’s recovery path. Nonetheless, with the short CNY unwind and the fading of the Greek crisis, we could see the bulls try another push. The EUR/USD found resistance near the 1.1045 level but if the bulls prove strong enough we could see a test of the 1.1080 area, in my view.

EUR/GBP traded somewhat lower during the European morning Tuesday, but hit support at the 0.7045 (S1) barrier and rebounded. As long as the rate is trading above the uptrend line taken from the low of the 5th of August, I would consider the short-term trend to be positive. However, I would prefer to see a clear break above 0.7100 (R1) before I get more confident on the upside. Something like that would confirm a forthcoming higher high on the 4-hour chart and perhaps open the way for our next resistance at 0.7160 (R2). Looking at our short-term momentum indicators, I see that the RSI rebounded from near its 50 line, but has turned somewhat down now, while the MACD, although positive, has topped and is sitting near its trigger line. These indicators detect weak upside momentum and support my view that it’s better to wait for a move above 0.7100 (R1) before anticipating a higher rate. On the daily chart, the fact that on the 5th of August the rate formed a higher low makes me keep a neutral stance as far as the overall picture is concerned.

• Support: 0.7045 (S1), 0.7015 (S2), 0.7000 (S3)

• Resistance: 0.7100 (R1), 0.7160 (R2), 0.7200 (R3)

To leave a comment you must be or register

By visiting our website and services, you agree to the conditions of use of cookies. Learn more I agree