The euro continues to try to break higher against the British pound, but at this point, it continues to see a bit of hesitation.
The euro has pulled back a touch against the British pound during trading on Friday as we approached the 200-day EMA. This is a technical indicator that a lot of people will be watching, and it is further compounded in importance due to the fact that it was also an area where we had seen both support and resistance previously.
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So, with all of that, it does make a certain amount of sense that there could be some buyers simply taking profit heading into the weekend. After all, this type of confluence, and the fact that the interest-rate situation still favors the United Kingdom, means that traders will more likely than not just be willing to sit on their hands.
Now, if we can break above the 200-day EMA on a daily close and perhaps the 0.8650 level
Then we could see some bullish momentum really start to pick up. If we were to break down from here and break below the 0.86 level, then that would be pretty negative for this market. It could send traders into this as a short, but more or less just trading this for a short-term, back-and-forth kind of range-bound position.
I do not think we are in a scenario where we are going to see some type of massive change in momentum because, although the British pound pays you in this equation, the reality is both economies have the same problem when it comes to energy being a major driver of where things go going forward.
While we have broken out to the upside, it is not until we kill the signs of selling pressure near the 200-day EMA that I would get aggressive.
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