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FxWirePro: EUR/GBP capped at 0.87 handle, focus on German data and Draghi's speech for cues on further direction

EUR/GBP chart on Trading View used for analysis

  • EUR/GBP recovery is capped below 0.87 handle, upside is unlikely to gather traction. 
     
  • ECB minutes on Thursday had a dovish tilt, acknowledging that near-term growth is likely to be weaker than expected.
     
  • The central bank added that more data is still needed to assess more medium term impacts.
     
  • Focus now on German data which includes GDP, Ifo business climate and eurozone inflation data.
     
  • German GDP is expected to show the growth rate stalled in Q4. Disappointing data could add pressure on the single currency. 
     
  • The focus would shift to Draghi speech post-German data. The central bank head is likely to sound dovish, confirming a rate hike is unlikely to happen any time soon.
     
  • Technical studies are bearish. Guppy's Multiple Moving Average setup shows that the major trend is bearish. 
     
  • Stochs and RSI show momentum is bearish and MACD is on verge of bearish crossover on signal line

Support levels - 0.8655 (Nov 13 low), 0.8620 (trendline)

Resistance levels - 0.8701 (5-DMA), 0.8746 (20-DMA)

Recommendation: Good to stay short on upticks  around 0.87/0.8710, SL: 0.8755, TP: 0.8655/ 0.8620

For details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex
 

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