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EUR/GBP turns flat at 0.7730 post Euro-zone PMI data Haresh Menghani
10:23 23 May /2016 Forex
On Monday, the EUR/GBP pair built on to its Friday’s sharp recovery and touched a session peak level of 0.7754 during European session but has now erased all of its gains to currently trade at 0.7730.
The pair gained traction after the flash version of German PMI printed slight better-than-expected growth. The up-move, however, was capped on disappointment from French manufacturing PMI release. The pair went on to erase all of its gains after the composite Euro-zone PMI printed slightly weaker-than-expected growth.
Given the ECB's dovish stance, any further upside is likely to be capped and a bullish spike might be looked upon as an opportunity to initiate fresh shorts. Moreover, the overall lead for 'Remain' camp in the 'Brexit' poll might continue to support bid tone for the British Pound and eventually restrict further depreciation against the shared currency.
Technical levels to watch
From current levels, the pair is likely to find immediate support near 0.7700 round figure mark, which if broken seems to drag the pair back towards 0.7670-65 support area. A follow through weakness below 0.7670-65 support is likely to get extended even beyond last week’s low support near 0.7650, towards testing its next major support near 0.7615-10 zone.
On the upside, April month daily closing lows support, now turned resistance, near 0.7750 remains immediate hurdle to clear. A sustained break through this immediate resistance has the potential to lift the pair back towards 100-day SMA resistance near 0.7780-85 region.