EURGBP reversed course in August after touching a decade-high of 0.9325, and has since been trending lower, with price action consisting of lower peaks and lower troughs in recent months. Yet, the bears seem to have lost their mojo near the 0.8500 handle, which also halted the move lower earlier this year. A clear move below that area is needed to re-energize the sellers.
Short-term oscillators are in broad agreement that downside momentum is losing steam. The RSI rebounded after testing its 30 line, while the MACD – although still negative – seems to be rising in tandem with its red trigger line.
If the bears retake the wheel and pierce below the 0.8500 zone, that would signal a resumption of the recent downtrend, turning the focus to the 2017 low of 0.8310 – a hurdle tested multiple times back then. Even lower, the next target may be the 0.8120 territory, marked by the swing high on April 2016.
On the upside, if the 0.8500 level holds, then the first obstacle for the bulls may be the 50-day simple moving average (SMA), currently at 0.8675. A positive break would shift the attention to the intersection of the 0.8800 handle and the 200-day SMA, where another violation could bring the 0.9020 hurdle into play.
In short, the outlook is negative, though a decisive break below 0.8500 is needed to cement that. Otherwise, a high above 0.9020 could turn the bias to neutral.
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