The US Dollar is still under pressure against Euro, with EURUSD opening in the London interbank market on a bid following above-forecast German GDP data, pushing to early-November highs near 1.1719.
The same price action has been seen in all Euro crosses after German Nov ZEW investor confidence nudged higher to 18.7 from 17.6 in October.
The overall Eurozone readings also improved further, with Eurozone Q3 GDP confirmed at 0.6% q/q,in line with expectations and the initial estimate.
There still is no full breakdown, but Germany’s stats office this morning reported a strong contribution from external demand and net exports. The same is likely to hold for the Eurozone as a whole.
Indeed, industrial production data, released at the same time, showed production down -0.6% m/m and up 1.1% q/q, with the latter a slight deceleration from the 1.2% q/q reported for the second quarter.
So the domestic economy is racing ahead and is now getting backing from improving world growth and international demand.
The pound on the other had lost about 40 pips to the dollar in the immediate wake of the data release, leaving a low at 1.3074, while EURGBP is at new month’s high at 0.8953 since the steady UK Oct CPI data at 3% y/y added further weakness on Sterling.
EURGBP opened today and is traded above a two months trend-line and the 50-Day MA at 0.8890. In addition to this Daily Stochastic has unwound again above 50.0 while the Parabolic SAR turned positive yesterday.
Both suggest that positive momentum turned back for a possible push higher up to 50.0 Fibonacci level at 0.9020, which is last week’s resistance and last month’s high.
Hence a retest of the 0.9020 October resistance seems to be back in play again. Support comes between 20 DAY and 50-Day MA at 0.8880-0.8890.
Meanwhile, after the sharp incline up to 38.2 Fibonacci level, the pair is likely to present a correction or consolidation mode for the rest of the day.
The Stochastic is overbought in the 1-hour and 4-hour charts, while Upper Bollinger bands pattern have been extended, presenting a limited upside momentum in these two time-frames.
Hence in contrast with the high-term, a Short Position was taken intra day, with entry at 0.8949 and target down to recent high fractal at 0.8920. Support set at 0.8980.