- EUR/GBP printed a weekly high at 0.8594.
- The pair broke the 100-DMA on Monday, suggesting buyers are in control.
- As the spot price remains beneath the 200-DMA, downward pressure stills in play.
The EUR/GBP is advancing for the third day in a row, trading at 0.8593, up 0.08% at the time of writing. The market sentiment is upbeat after Monday’s selloff due to Evergrande’s woes and its possibilities of defaulting the interest payments on Thursday.
EUR/GBP daily chart
The pair bounced off the 100-day moving average (DMA) at 0.8571, approaching the weekly high printed on Monday nearby 0.8600. A daily break above 0.8600 will open the door for further gains. The first resistance level would be a downslope trendline, around the 0.8630-50 range. Once that level is cleared, the next supply zone would be the confluence of the July 20 high and the 200-DMA within the 0.8660-68 range, followed by the April 26 high at 0.8720.
On the flip side, failure at 0.8600 the EUR/GBP could slide towards the 100-DMA. A break of that level would expose the 50-DMA at 0.8545 followed by the September 16 low at 0.8500. A decisive breach of that level could push the price towards 2021 lows at 0.8450.
The Relative Strength Index is around 58, supporting the upside bias, but downward pressure could be in play as long as the 200-DMA remains above the spot price. Caution is warranted.
KEY TECHNICAL LEVELS TO WATCH
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