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    IronFX Intraday Comment | EUR/GBP| 17/11/2015

    • The dollar traded unchanged or lower against its G10 peers during the European morning Tuesday, ahead of the US CPI data for October. The greenback was lower against GBP, AUD, NOK, JPY and CAD, in that order, while it was unchanged against the EUR, CHF, NZD and SEK.
    • Even though the German ZEW expectations index showed economic sentiment rising to 10.4 in November from 1.9 previously, EUR/USD maintained its choppy price action and stayed below our 1.0685 resistance barrier. The figure was above the market expectations of a rise to 6.0. The outlook for the German economy show signs of improvement towards the end of the year, but I would prefer to see another improved reading in December to trust the recovery, as the Paris terror attack may deteriorate sentiment going forwards. In addition, the weak current situation index offset the momentum in the expectations index and may keep EUR under selling interest, in our view.
    • The UK inflation rate fell 0.1% yoy in October, unchanged in pace from the previous month and in line with market expectations. What’s more, the core CPI rose 1.1% yoy, at a faster pace from September and above expectations of 1.0% yoy. Although the headline figure remained in deflation, the unexpected rise in the core figure strengthened the British pound across the board. Nevertheless, I would prefer to see a positive surprise in retail sales to be released on Thursday, to trust further advances.
    • EUR/GBP traded lower during the European morning Tuesday, after it hit resistance near 0.7030 (R1). The short-term outlook remains negative in my view, but I prefer to wait for a break below the psychological zone of 0.7000 (S1) before I trust that down path again. Such a move is likely to initially aim for our next support barrier of 0.6970 (S2). Our short-term momentum indicators detect negative momentum and support that the downtrend is likely to continue. The RSI fell below its upside support, while the MACD, already negative and also below tis respective support line, stands below its trigger line and points down. However, the RSI has turned somewhat up again, raising concerns that a possible corrective bounce could be on the cards before the bears decide to shoot again. 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: 0.7000 (S1), 0.6970 (S2), 0.6950 (S3)
    • Resistance: 0.7030 (R1), 0.7070 (R2), 0.7100 (R3)

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