EURGBP The rebound of the euro is underway 29.11.2021

2021-11-29

The Euro tried to rebound against the Pound and the Dollar Friday morning despite the high risk aversion of investors in the financial markets due to the discovery of a new strain of COVID-19 in South Africa. Equity markets and pro-cyclical currencies are down sharply overnight, but not the euro, which is also considered a pro-cyclical currency.

The sellers of the single currency seem to be out of breath. It must be said that the euro has lost a lot of ground against its peers in recent weeks. EUR/GBP recently fell to its lowest level since March 2020 and EUR/USD to its lowest level since June 2020.

Market participants will not have any major catalysts to focus on until later this week. The news on the new variant will likely be the only driver for financial markets in this last session of the week.

Next week, the macroeconomic agenda should take over. Final PMIs from the world’s major economies including China will be released as well as Eurozone retail sales.

From a technical perspective, the rebound in EURGBP reported earlier this week is confirmed. The EURGBP has just broken out of a range/triple bottom consolidation pattern at the top of the chart by breaking above resistance at £0.8427, paving the way for a bullish reversal.

In addition, the EURGBP has broken out of the top of its Bollinger Bands on the 4-hour time frame after a period of squeezing, which is also a bullish signal.

The outlook is therefore bullish again in the short term. The first resistance to watch will be the symbolic threshold at £0.85, then the upper bound of the descending channel in which the EUR/GBP has been moving since the spring, around £0.86.

This short-term bullish outlook would be invalidated in case of a pullback below the neckline of the range/triple bottom at £0.8330. Traders should look towards the price action in the run up to the 0.85 resistance and may position themselves for a long position if that level gets breached.

Support & Resistance Levels:

R3       0.8720
R2       0.8600
R1       0.8500
S1        0.8440
S2        0.8381
S3        0.8330

Analyzed by: Mr.Thibault Moirez, Independent Analyst

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