EUR/GBP Wrestles Hard Amidst USD Drop on COVID-19
The extent of the COVID-19 pandemic has sent EUR/GBP on a rollercoaster ride.
The relationship between the two currencies at the moment is now more or less like two kids on a see-saw or a swinging pendulum.
The currencies continue to wrestle for who will gain the upper hand and the dynamics are changing by the minute. But which currency will ultimately come out on top?
|S3: 0.8723||S2: 0.8919||S1: 0.8997|
|R1:0.9193||R2: 0.9307||R3: 0.9510|
The moving averages MA5 and the MA10 on the lower timeframes signal a strong sell. However, the MA (MA20, MA50, MA100, and MA200) on the higher timeframes signals a buy. The MACD (12,26) also favours this bias, signalling a strong buy.
At this critical point, you might be looking to go long on the market as it is about to hit key support and we anticipate that the bulls will pick up from here.
The possibility of a recovery for the euro indicates that it might look to once again hit last week’s high of 0.94964. Above that point, prices may look to move to 0.9803, which hasn’t been seen since 2008.
For the time being, however, we expect the market to see extended periods of consolidation.
It’s a crazy time for fundamentals. Fundamentals are driving the market more than ever. Both the pound and the euro are now more robust against the USD. However, placing them side by side, we observe that the pound has been gaining momentum over the last few days while the euro is falling steadily.
This is largely because investors are waiting patiently on further announcements from the Bank of England. These will have direct implications for the market and will continue to influence trading conditions.
At present, the Bank of England had fixed its interest rates at 0.10%.
For the EU however, things are not so gloomy. Though Italy has been dramatically affected by the COVID-19 virus, they and the other European states have declared that they will issue joint European debt to provide assistance through this dire period.
The future direction of the market will be significantly influenced by the severity of the impacts felt by different countries and how they choose to respond to the pandemic.
For the time being, we will continue to anticipate the final decision from the Bank of England on stimulus relief for the UK.
Until that announcement is made however, we may continue to see the back and forth struggle play out between the pound and the euro.