EUR/GBP fails to reclaim 0.8366, heads towards high 0.8320s

The EUR/GBP slides for the second consecutive day in the week, and on its way down, the EUR/GBP broke the bottom trendline of a descending channel, exerting additional downward pressure on the already battered euro. At the time of writing, the EUR/GBP is trading at 0.8328.

A dismal market mood usually has favored the euro, but the conflict between Ukraine-Russia is taking place in Europe; it weighs on the shared currency. Furthermore, comments made on Tuesday by Russian President Vladimir Putin that talks with Ukraine are at a dead end, so the hopes of a cease-fire or truce seem farther now than before. Meanwhile, hostilities remain in the region of Donetsk as Russia regroups its troops as evacuations of the area continue.

Another factor that accelerated the euro depreciation was the ZEW Economic Sentiment for Apri, which came worse than March’s reading in the Euro area and Germany. Furthermore, Germany reported inflation for March that rose by 7.3%, in line with expectations but much higher than the 5.1% February jump.

Elsewhere, the UK docket unveiled the jobs report. The Unemployment rate rose by 3.8% in line with forecasts, while Employment Change for January reported that the economy added just 10K jobs, lower than the 40K estimated. Albeit the report was mixed, the British pound has the upper hand as the Bank of England has already hiked rates, while the ECB is to finish first the Quantitative Easing by the summer of 2022.

Therefore, the EUR/GBP will keep falling unless the ECB turns more hawkish on Thursday, April 14, when the ECB unveils its Interest Rates Decision.

EUR/GBP Price Forecast: Technical outlook

The EUR/GBP remains downward biased, as shown by the daily moving averages (DMAs) located above the spot price, with a downslope. Furthermore, the EUR/GBP broke the bottom trendline of a descending channel, exacerbating a move towards March 07 swing low at 0.8202. Nevertheless, the cross-currency pair would need to overcome essential demand zones on its way south.

The EUR/GBP’s first support would be the April 12 0.8319 daily low. A decisive break would expose the April 7 daily low at 0.8307, followed by March 23 daily low at 0.8295. If that level gives way to EUR/GBP sellers, a move towards the YTD low at 0.8202 is on the cards.