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EUR/GBP walks on tight rope above 0.8800 as Covid woes join pullback in yields

  • EUR/GBP struggles to extend pullback from 11-week high.
  • US Treasury yields retreat from three-week top, EU bond coupons grind near 11-year high but Gilts stay depressed.
  • Geopolitical fears from Russia join China Covid woes but lack of market participation, absence of major data bore momentum traders.

EUR/GBP remains sidelined around 0.8825, after reversing from a nearly two-month high the previous day, as traders seek more clues amid the market’s indecision headline into Thursday’s London open.

Even so, the cross-currency pair remains pressured as the geopolitical concerns surrounding Russia and fears of economic slowdown propel the Eurozone Treasury bond yields while the UK’s Gilts dropped to the lost levels for seven weeks.

Russia’s rejection of peace with Ukraine unless it accepts the treaty allowing additional territories joins an escalated war in the city of Kherson to weigh on the sentiment. On the same line could be the major nations’ notification to require the Covid tests for Chinese travelers amid doubts over Beijing’s reporting of data and a hidden jump in the virus numbers.

It’s worth noting, however, the comparatively stronger hawkish bias of the European Central Bank (ECB) policymakers versus the Bank of England (BOE) decision-makers challenge the EUR/GBP bears. Even so, the chatters surrounding the bloc’s recession seem to have gained more attention of late, which in turn should have recalled the bears the previous day.

Against this backdrop, the US 10-year Treasury yields dropped 2.8 basis points to 3.86% by the press time, after rising the most since October 19 the previous day. That said, the Eurozone 10-year Treasury bond yields rose to the highest levels since July 2011 before retreating to 2.51% while the UK’s 10-year Gilt coupons dropped for the third consecutive day to refresh multi-day low.

Looking forward, the EUR/GBP is likely to witness more inaction but the recent escalation in the Russia-Ukraine fight and the economic slowdown fears surrounding the bloc could weigh on the prices.

Technical analysis

Despite the failure to cross the 0.8855-65 resistance zone, comprising multiple levels marked since late September, EUR/GBP remains on the bear’s radar unless breaking the 200-DMA support, close to 0.8575 at the latest.

Additional important levels

Overview
Today last price0.8824
Today Daily Change-0.0004
Today Daily Change %-0.05%
Today daily open0.8828
 
Trends
Daily SMA200.8689
Daily SMA500.8686
Daily SMA1000.8673
Daily SMA2000.8571
 
Levels
Previous Daily High0.886
Previous Daily Low0.8794
Previous Weekly High0.8834
Previous Weekly Low0.8691
Previous Monthly High0.8828
Previous Monthly Low0.8572
Daily Fibonacci 38.2%0.8819
Daily Fibonacci 61.8%0.8835
Daily Pivot Point S10.8794
Daily Pivot Point S20.8761
Daily Pivot Point S30.8728
Daily Pivot Point R10.8861
Daily Pivot Point R20.8894
Daily Pivot Point R30.8927

Author

Anil Panchal

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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