The Euro has rallied a bit in early Wednesday trading, as the choppiness in this pair continues. However, there are significant resistance barriers above. Patience will be key when putting position on here.
EUR/GBP
The Euro has rallied a little bit during the early hours on Wednesday against the British Pound as we are testing the 50-day EMA. All things being equal, this is a market that I think is likely to continue to see a lot of selling pressure near the 0.8750 level. This is an area that will likely be very important to pay close attention to.
The 0.8750 level is an area that's been important multiple times and therefore I think watching that area for signs of exhaustion to start shorting might be the way forward. We will just have to wait and see how that plays out.
INTEREST RATE DIFFERENTIALS AND MARKET CHOPPINESS
Ultimately, I do think that the interest rate differential still favors the UK before this is all said and done, despite the fact that the Bank of England is likely to be cutting rates going forward. I do not think they cut as deep as the Europeans, at least not as things stand right now.
Ultimately you have to be very cautious trying to trade this pair for big moves because it ends up being very choppy most of the time and therefore you have to be a little bit patient but don't jump in with both feet.
The market will continue to see a lot of back-and-forth trading as per usual, but to me it looks like we have made a new swing high. If that's going to be the case, this is a market that given enough time probably tries to get down to the 200-day EMA, possibly even the 0.86 level underneath.