Nick Nasad
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EUR/GBP - At Key Juncture as Pair Tests 0.84 Handle

Those that have been following me here for the last month and a half should know that one of my most confident biases has been for a weaker EUR/GBP pair, as I have been closely following the positive macro data from the UK (which included a pretty strong employment report in the Wednesday European session).

From a technical perspective I am heartened by the strong break of the long-term trendline in the EUR/GBP as well as the 200-EMA, the bearish crossover of the 21 and 55 EMA, and the widening angle and separation of those medium term moving averages.

The pair now finds itself at a very key juncture now though, as it has come down from a high of 0.8770 down to 0.8400 since August 1st, and for a second time in the past 4 sessions tests that critical support area.

A break here and we open up the way down to 0.8225 as we would unwind the rally seen in January. The macro situation remains the same, stronger than expected data out of UK is increasing bullish bets on the BOE, while the ECB has been fairly dovish as it tries to nurture the Euro-zone's exit out of recession.

Therefore, my bias remains, and I would expect this support area to break sometime in the near future, however, I am also going to be on the look-out for some sideways action, or a pullback to perhaps 0.8470, in order to work out some of the oversold conditions in the pair.

- Nick