EURGBP Trade Update – Hitting Support

EU and UK flags
EURGBP has moved lower but has hit support

We entered a short position on EURGBP earlier this month with an average entry position of .7858.  It took awhile for the pair to move lower but it finally dropped this week when the UK beat consensus estimates on employment and retail sales.

Time Cur. Imp. Event Actual Forecast Previous
Tuesday, May 17, 2016
08:30  GBP CPI (MoM) (Apr) 0.1% 0.3% 0.4%
08:30  GBP CPI (YoY) (Apr) 0.3% 0.5% 0.5%
08:30  GBP PPI Input (MoM) (Apr) 0.9% 1.1% 2.2%
09:00  EUR Trade Balance (Mar) 28.6B 22.5B 19.0B
Wednesday, May 18, 2016
08:30  GBP Average Earnings Index +Bonus (Mar) 2.0% 1.7% 1.9%
08:30  GBP Claimant Count Change (Apr) -2.4K 4.3K 14.7K
08:30  GBP Unemployment Rate (Mar) 5.1% 5.1% 5.1%
09:00  EUR Core CPI (YoY) (Apr) 0.7% 0.7% 0.8%
09:00  EUR CPI (YoY) (Apr) -0.2% -0.2% -0.2%
09:00  EUR CPI (MoM) (Apr) 0.0% 1.2%
Thursday, May 19, 2016
08:30  GBP Core Retail Sales (MoM) (Apr) 1.5% 0.6% -0.7%
08:30  GBP Core Retail Sales (YoY) (Apr) 4.2% 1.9% 2.6%
08:30  GBP Retail Sales (MoM) (Apr) 1.3% 0.5% -0.5%
08:30  GBP Retail Sales (YoY) (Apr) 4.3% 2.5% 3.0%
11:30  EUR ECB Publishes Account of Monetary Policy Meeting   

Our target for the trade is .725 and expect it to take months to hit the target.   There should be support for the pair around .7667 through .752 and even more support from .74 to .72.

EURGBP Daily Chart
EURGBP opened lower this session but has run into support at .7668. There is an HVA from February from .7550 to .7668 that will be hard to break into on the first attempt.
EURGBP weekly chart
EURGBP is pressing lower but has met support at its current levels. This is not a good place to enter a short position. I’d wait and watch.

This week’s move is significant but not likely to extend its gains through Friday.  If you are not in the trade then it is better to watch and wait for an opportunity to enter.

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