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IronFX Intraday Comment | EUR/GBP | 13/11/2015

• The dollar traded unchanged against most of its G10 peers during the European morning Friday. It was slightly higher against EUR, while it was lower against CAD and NOK.

• Eurozone economy grew less than expected in Q3, in a clear sign that the ECB will need to step up its efforts to support the fragile recovery. Germany, France and Italy released their preliminary GDP data in the course of the morning, with all but France showing further weakness. German figure showed another disappointment, suggesting that the downturn in emerging markets are hurting Eurozone’s growth engine. With no unexpected positive economic surprises going into the December meeting, the ECB may expand its stimulus program to boost the bloc’s recovery. This is likely to keep EUR under selling pressure.

• EUR/GBP traded lower during the European morning Friday, after it hit resistance slightly above the 0.7100 (R1) line. However, the decline fell short of reaching our 0.7050 (S1) support zone, which makes me take the sidelines at the moment. A break below the 0.7050 (S1) zone is needed to confirm a forthcoming lower low on the 4-hour chart, something that could initially target the 0.7030 (S2) support and then the psychological zone of 0.7000 (S3). Our short-term oscillators, although within their negative territories, rebounded from their upside support lines. What is more, the RSI turned up and could move back above its 50 line, while the MACD still stands above its trigger line. These momentum signs support my choice to stay flat for now. Switching to the daily chart, I see that the dip below the 0.7200 hurdle on the 28th of October has confirmed the negative divergence between the daily oscillators and the price action, and has also turned the longer-term outlook back negative. This increases the possibilities for EUR/GBP to continue trading lower in the not-too-distant future.

• Support: 0.7050 (S1), 0.7030 (S2), 0.7000 (S3)

• Resistance: 0.7100 (R1), 0.7130 (R2), 0.7150 (R3)



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