EUR/GBP flirting with lows near 0.8700 handle post Draghi

The EUR/GBP cross failed to build on early European session tepid recovery move and hangs closer to to session lows near the 0.8700 handle post Draghi. 

Spot so far has maintained its bearish bias at the start of a new trading week and failed to attract any fresh buying interest despite of some hawkish comments from the ECB President Mario Draghi. During his testimony before the Committee on Economic and Monetary Affairs (ECON) of the European Parliament in Brussels, Draghi was noted saying that downside risks to growth have diminished further. 

Draghi, however, showed concerns over domestic wages, which were insufficient to support the HICP towards our medium-term objective and reiterated that an extraordinary amount of monetary policy support was still necessary. At its June meeting, the ECB will update its outlook on growth and inflation.

Bulls, however, seemed unconvinced that the central bank would eventually signal towards tapering its QE program and hence, failed to provide any immediate boost to the shared currency. 

Meanwhile, a goodish recovery bounce in the GBP/USD major, despite of renewed worries over 'hard Brexit'  scenario and latest polls on the upcoming UK general election that showed narrowing lead for May's Conservative party, further collaborated to the pair's corrective slide from the highest level since mid-March, touched on Friday last week. 

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Moving ahead, investors this week would confront important UK PMI releases, scheduled at the beginning of a new month, which would help determine the pair's near-term trajectory.

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Technical levels to watch

On a sustained break below the 0.8700 handle, the cross is likely to accelerate the slide towards 0.8685-80 horizontal support before eventually heading towards its next support near 0.8650-45 area. 

On the upside, 0.8725-30 now seems to have emerged as immediate hurdle, which if cleared has the potential to lift the cross beyond Friday's swing high resistance near mid-0.8700s towards testing its next hurdle near 0.8775 level ahead of the 0.8800 handle.