EUR/GBP Price Forecast: Pulling back within downtrend

Joaquin Monfort FXStreet

EUR/GBP is correcting back after an extended down move which took the pair to a key target level.
The RSI momentum indicator has exited oversold and given a buy signal.

EUR/GBP has pulled back after trending lower. It remains in a short and medium-term downtrend, however, suggesting the decline could resume. It is a principle of technical analysis that “the trend is your friend” which means that the odds favor a continuation of the bear trend for EUR/GBP.

EUR/GBP Daily Chart

That said, EUR/GBP has reached a potential downside target for the bear move that began at the August 5 high when it reached the top of its range. As such it may have completed its bearish decline. The target is the 61.8% extrapolation of the initial move down during August before the channel that formed in early September and pulled back higher for two weeks.

A break below the 0.8317 September 24 low would reconfirm a continuation of the downtrend towards the next target at 0.8287, the August 2022 low.

The Relative Strength Index (RSI) has exited oversold, suggesting the risk of an extended correction unfolding to the upside.

Author

Joaquin Monfort

FXStreet

Joaquin Monfort is a financial writer and analyst with over 10 years experience writing about financial markets and alt data. He holds a degree in Anthropology from London University and a Diploma in Technical analysis.

AUD/USD hits nine-week lows below 0.7000 on RBA Bullock's remarks

AUD/USD reverses a brief uptick and turns lower to hit nine-week lows below 0.7000 in the European morning on Tuesday, as traders digest cautious remarks from Reserve Bank of Australia (RBA) Governor Michele Bullock during the press conference. Earlier on, the RBA raised the cash rate to 4.60%, as widely expected, leaving the door open to further rate hikes if needed.

USD/JPY consolidates near 157.50 as a bullish USD counters intervention risks

USD/JPY struggles to capitalize on the overnight bounce from a one-week low, consolidating around 157.50 in the Asian session on Tuesday. Trump's concerns about the Japanese Yen's weakness fueled speculation about another US-Japan joint intervention. This, along with the hawkish BoJ, underpins the JPY and caps the currency pair. Meanwhile, rising Fed rate-hike bets and oil-driven inflation fears continue to push US bond yields to multi-year highs, keeping the US Dollar pinned near a two-month high and supporting the pair.

Gold seems vulnerable near eight-week low amid Fed hike bets

Gold struggles to capitalize on a modest Asian session uptick, trading near its lowest level since August 4, around the $4,100 neighborhood, touched the previous day. Moreover, the bearish fundamental backdrop suggests that the path of least resistance for the precious metal remains to the downside.

Chainlink trims gains after CCIP 2.0 launch, Swift ledger integration

Chainlink (LINK) edges below $15.00 on Tuesday, trimming its 10% gains from the previous day, driven by the launch of its new Cross-Chain Interoperability Protocol 2.0 and Swift ledger integration for tokenized deposits and 24/7 cross-border payments.

Focus turns to US job openings

In the euro area, focus turns to the September flash inflation print for Spain which will give the first indication of where the euro area data on Friday lands. We expect a modest rise in headline due to higher energy costs and a small increase in core inflation. We also receive the European Commission's business survey for September.

Fed vs BoJ: Both hiked. The market only believes one of them – and the chart shows which

The Fed and the BoJ have just done something remarkably similar. Both central banks raised interest rates by 25 bps last week, both are confronting inflation risks, and both signal that future decisions will depend on incoming economic data.