The Euro (EUR) is nursing minor losses against the British Pound (GBP) on Wednesday, trading just above the 0.8655 support area, after a week of losses. UK inflation data put some pressure on the Pound, but the Eurozone's final Harmonized Index of Consumer Prices (HICP) failed to provide support for the Euro. This week's data has confirmed that yearly inflation rose to 3% in April from 2.6% in March, adding pressure on the European Central Bank to hike interest rates despite weakening economic activity. In contrast, UK consumer inflation eased beyond expectations in April, giving the Bank of England leeway to keep its monetary policy unchanged in June. The Pound reacted with moderate declines.
The EUR/GBP pair's immediate trend has shifted to bearish this week, following a sharp reversal from last week's highs. The 4-hour Relative Strength Index (RSI) is around 39, indicating lingering downside pressure, while the Moving Average Convergence Divergence (MACD) remains in negative territory, suggesting that recent rebounds are corrective. Bears are pushing against the 0.8655 area, with the focus on the weekly low near 0.8645. Further down, the target is the May 11 low at 0.8630.
The pair has confirmed the break of the 200-period moving average in the 4-hour charts, an indicator closely observed by traders, which is likely to offer significant resistance near 0.8680, along with the 38.2% Fibonacci retracement of this week's sell-off and Tuesday's high above 0.8685. Further up, the 61.8% Fibonacci retracement coincides with the March 15 lows in the 0.8700 area.
The Euro's performance this week has been mixed. The table shows the percentage change of the Euro against major currencies. The Euro was the strongest against the Australian Dollar. The heat map provides a visual representation of percentage changes of major currencies against each other, with the Euro as the base currency. This data highlights the Euro's performance relative to other currencies and provides insights into the currency's strength and weakness.
In conclusion, the EUR/GBP pair is facing bearish pressure, with the 0.8655 area as a key support level. The Eurozone's inflation data and the European Central Bank's potential interest rate hikes are adding to the downward pressure. Meanwhile, the UK's easing inflation and the Bank of England's unchanged monetary policy are providing some relief to the Pound. The technical analysis suggests that the pair is likely to continue its downward trend, with the 0.8645 and 0.8630 levels as potential targets. The Euro's performance against other currencies this week has been varied, with the Australian Dollar being the strongest.
