EUR/GBP catches a bid on Draghi, can it now close above key Jan highs?

Ross J Burland FXStreet

Currently, EUR/GBP is trading at 0.8852, up 0.72% on the day, having posted a daily high at 0.8855 and low at 0.8783.

EUR/GBP has been injected with a bought of demand on the recent time frames as the dollar is sold off and the euro catches a boost from optimism in Draghi.

ECB's Draghi: ECB could look through transitory inflation weakness - Bloomberg

The euro took off to its highest since September versus the dollar after the ECB Draghi said the ECB could look through transitory inflation weakness when formulating monetary policy. EUR/USD broke up to 1.1335 and the cross followed suit. Sterling also caught a bid on the weakness in the dollar, slowing the pace of the crosses advance. Traders are now on watch for a speech from Fed Chair Janet Yellen in London, set for 1 p.m. ET; anything upbeat could be a booster for the greenback.

EUR/GBP levels

EUR/GBP is testing 0.8852/68 areas with the January high and recent highs, however, the cross will need to close above here to confirm further upside potential to 0.8987/.9059, the 61.8% retracement and the highs from mid-October, as suggested by analysts at Commerbank. "The 0.8852 high, which is reinforced by the 0.8858 50% retracement of the move down from the 0.9403 spike high, and this is likely to prove tough to break. Where are we wrong? It is starting to erode the short term uptrend and below here will trigger losses to the 0.8624/.8595 200 and 55 day ma."

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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