Over this course of this year 2020, the euro strengthened from the weak position it struggled early on, marching to its multi-month high. That said, it looks to be in good technical shape but not fundamental. We have been recommending long euro against CHF, GBP, and USD, whereas EURCHF not lived up to expectations. The cross EURGBP rallied nearly 6% the most since October 2019, now facing stiff resistance at multiple key moving averages. As we noted last week, the price remains capped at 0.8770 (Weekly basis).
The Manufacturing PMI rose to 51.7 in February, up from 50.0 in January, but below the earlier flash estimate of 51.9. The PMI posted above the 50.0 neutral marks for the first time in ten months.
Data preview: There isn’t much data to focus on except monthly GDP estimate for January (Wed) and ECB meeting (Thu).
The level to watch in EURGBP is 0.8770. The cross is approaching interesting support here at 0.8770 its 100MA (Weekly) and 20MA (Monthly). This also includes the 200-DMA. Breaking above the level would increase the chances of continuing up move towards 0.8800 and 0.8815 its Feb 2013 high.
A move above 0.8515 should open the door towards 0.8900. That said, the fact the initial consolidation of the December 2019 low and January 2020 high created a range of 320 pips, which means a close above 0.8600 would ultimately open to 0.8915.
On the downside, 0.8620, as good support below here focuses on 0.8470.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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