- EUR/GBP dives to eight-week lows below 0.9000.
- A dovish ECB and COVID-19 have sent the euro 0.8% lower this week.
- The pair is testing an important support level at 0.9000.
The euro has extended its decline from week-highs near 0.9100, reaching levels sub-0.9000 for the first time in almost two months. The increase of COVID-19 cases in Europe and the measures to tackle them have hammered the euro against a somewhat stronger pound this week
Euro hammered by the ECB and COVID-19
The common currency is trading lower against the pound sterling for the second consecutive day on Friday and set for a 0.85% weekly decline. Investors’ concerns about the impact of the new lockdowns introduced in France and Germany and the regional confinements in Spain on a fragile economic recovery have punished the euro this week.
Apart from that, the dovish message of the European Central Bank on Thursday, flagging the introduction of further stimulus measures in December have increased selling pressure on the euro.
In contrast, the pound has remained fairly strong this week, favoured by the absence of Brexit news. The reopening of the talks this week, with the EU aiming for a deal by mid-November has eased fears of a “hard Brexit” which has buoyed the GBP.
EUR/GBP flirting with an important support level at 0.9000
From a technical perspective, the euro is eroding the base of the last weeks' trading range, at 0.9000 psychological level. A successful breach of this level might increase bearish pressure towards 0.8911 (61,8% Fibonacci retracement of the May – September rally) before testing September lows at 0.8865.
On the upside, an upside reaction should extend beyond the 0.9100 descending trendline resistance to negate the bearish trend, and extend later to 0.9145 (October 20 high) and 0.9220 (September 23 high).
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: Extra upside now looks at 0.6550
AUD/USD managed to leave behind Tuesday’s strong decline and printed a decent recovery on Tuesday, retesting the 0.6500 zone amid the broad-based retracement in the US Dollar.
EUR/USD need to clear 1.0600 to allow for further advances
The strong sell off in the Greenback encouraged EUR/USD to set aside the previous day’s pullback and refocus on a potential visit to the key barrier at 1.0600 the figure ahead of key data releases in the euro area later in the week.
Gold eases from daily highs as bears seize control
Gold remains on the positive foot near $2,640 per troy ounce, as US inflation data matched initial estimates in October, while US yields display a negative performance across the curve.
Ethereum Price Forecast: ETH surges 9% with increased capital inflows, bulls set sights on $4,522
Ethereum (ETH) rallied 9% on Wednesday following increased capital inflows into ETH ETFs and a major uptick in its open interest and futures premium. If the bullish momentum sustains, ETH could overcome its yearly high resistance of $4,093 and rally to $4,522.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.