Technical Analysis On EUR/GBP

0.8950 is SERIOUS resistance. Look how many attempts were made at on the way down as it served as the upper boundary of an area of support then.

Now yesterday’s rally failed to break the 0.8950 price level and exhausted at a high of 0.8947. Technically, no real cause for concern as the pair is still consolidating. Fundamentally, if, in fact, the risk trade is causing the EUR to surge then this rally could continue. This time though, the risk trade is a little different. Rather than being driven by poor economic data, risk is being fuled by the rally in gold, oil, and other commodities that is giving traders the appetite to buy riskier assets. In fact, the USD continues to weaken despite poor US economic news that would have usually driven investors to safe-haven assets. On the other hand, the BoE just keeps getting more and more dovish. The minutes revealed a discussion on cutting interest rates. WTF?! I don’t see how the GPB can rally even in the long term until the BoE takes steps towards tightening monetary policy. I’m actually targeting 0.9000 for this currency pair. Price action at this major whole number and psychological level will be very telling.

As you know, trade what you see, not what I think.