- The euro drifted a little bit lower during the trading session on Thursday as we continue to hang around the 0.8450 level.
- The pound of course has given up some strength for a while, but I think a lot of this is just simple profit taking.
After all the market had been in a massive downtrend for what seemed like a lifetime and then dropped down toward the 0.8250 level to bounce that's an area that's been important as support all the way back to 2016 so the bounce is not a huge surprise. The question then becomes what happens next because we have to look at this through the prism of a market that is going to continue to see a lot of questions asked of both economies and with this, I would anticipate this overbought condition eventually breaks down, but I would not get short of the market until we break down below the 200 day EMA.
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On a Potential Move Higher…
If we were to turn around and break above the 0.85 level, then the EUR/GBP market could go much higher, perhaps reaching the 0.86 level. The 0.85 level is an area that's been important multiple times as well, so I think you need to pay close attention to it, but it is worth noting that just a few days ago, we ended up forming a shooting star, which of course is a sign of exhaustion. That exhaustion probably ends up being a nice cell signal if we do get a little bit more downward momentum. The overall trend, of course, is most certainly negative. I don't wish to fight that. I think we are more likely than not to drop from here, as the euro itself is a bit of a basket case overall. Ultimately, I am still bearish, but don’t necessarily like either of these currencies.
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