The EUR/GBP pair had an interesting session as the markets simply didn't go anywhere. The only reason this matters to me is that we are reaching the very first vestiges of resistance. It cannot go without notice that we have failed miserably to break out and above this area. I see this zone as starting at the 0.7950 area, and going all the way to the 0.8150 level.
With the recent action in this market, I find it very difficult to think that we're better breakout above the 0.8150 level. In fact, I see this as a wide zone that I would like to sell this currency pair. Quite frankly, over the last 48 hours I haven't seen much to make me think that we would even get above the 0.80 level.
It should also be noted that the British pound is fighting quite admirably against the US dollar. This shows that there is underlying strength in the British pound, and the fact that the euro has gained against it is probably more indicative of a relief rally than any kind of underlying strength. Because of this, I think that any weakness should be sold in this pair and I think we have a natural level at the 0.79 handle.
Looks weak
Although we did form of two hammers in a row, it must be said that suddenly we've lost momentum. Also adding to this analysis is the fact that the Euro looks so weak against many other currencies. The Japanese yen, the US dollar, the Australian dollar, and many others all look like you're about to gain on the Euro again. Also, nothing has changed in Europe to make me think that the situation is about to change.
With the European Central Bank getting ready to ease again, is very likely that we will see the Euro fall overall. With this being said, I am selling a break of the 0.79 handle which lines up quite nicely with the bottom of the Monday hammer. This would show a failure of support in my opinion, and should send this back down to try and reach the lows again.