The Euro (EUR) is experiencing some modest declines against the British Pound (GBP) on Wednesday. Following a brief recovery over the last two days, the currency has once again hit a significant resistance zone between 0.8580 and 0.8585, which is aligned with the peak of an upward triangle pattern.
On this particular Wednesday, both the UK and Eurozone are lacking substantial macroeconomic updates, and the Euro along with the Pound are slipping against a stronger US Dollar. This weakness comes amid rising global yields and renewed tensions in Iran, which have dampened risk appetite among investors.
In the Eurozone, comments from European Central Bank (ECB) Council member and Bundesbank President Joachim Nagel indicated that the market anticipates more than 95% probability of a rate hike in September. However, this did not significantly bolster the Euro. It appears that the currency pair may require additional momentum to surpass the mentioned resistance thresholds.
Technical Analysis: Euro faces strong resistance ahead of 0.8585
Currently, EUR/GBP is trading at 0.8573, maintaining a neutral stance with bullish movements being limited below the upper triangle pattern at the 0.8580-0.8585 range. Indicators reflecting momentum show an unclear trend, with the 4-hour Relative Strength Index (14) hovering around the critical 50 mark, and the Moving Average Convergence Divergence (MACD) remaining stable near the zero line.
Typically, triangles signify continuation patterns, and in this context, a bullish breakout seems likely. If the price can move past 0.8585 (the high reached on July 30), the following target would be the late June lows just above 0.8600. The anticipated target based on the geometry of the triangle aligns with the high from June 26, around the 0.8630 level.
On the bearish side, attempts are likely to be capped at the 0.8560 mark, where the bottom of the triangle intersects with Tuesday’s low. Should the price dip further, the August 25 low of 0.8546 is a crucial support point.
