Enduring bouts of volatility, the euro cross ended in solid green on June 13. The cross rallied nearly a percent and closed above 0.9000 marks. The cross closed more than 100 pips higher at 0.9040.
Euro traders are hoping for a quick EA recovery compare to the UK. The recovery theme and latest developments of Brexit are the key drivers to the euro cross in the coming days. We don’t expect any progress on the Brexit front in the near term. Flipside EA is advancing on the optimistic flavor of the EA Recovery Fund.
Past week, Rishi Sunak announced the government’s plans post-Brexit. Chancellor Rishi Sunak was preparing to introduce sweeping tax cuts and revised planning laws in up to 10 new ‘freeports’ across the UK, the Sun reported.
Telegraph cited, “Rishi Sunak plans Brexit tax cuts to save the economy.” According to the Sunday Telegraph reports that Sunak is drawing up plans to create 10 “freeports” in towns and cities across the UK where they will see sweeping taxation and regulatory changes.
Data preview: In the data front, we will see May Trade balance (Tue), June CPI (Wed), Mau ILO unemployment rates (Thu).
Prior to the retracement to 0.8930 level, the cross developed a bearish H&S pattern and fell below the neckline. The pattern target suggests a target of 0.8890, whereas the cross changes the course back to the North after kissing the 50MA. Shoulders spread between 0.9070-0.9080 levels.
The EURGBP price has reaffirmed support at 50MA. The RSI is parked above the equilibrium line to 50 points. The oscillator is negative and stationed below 0. The setting is mixed.
The 0.9100 level is in focus for me. Any break and hold above would have me looking to the 61.8% fib reaction. On the upside, the trend is supportive, but the price needs to take out the recent high 0.9175 to confirm the trend once again.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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