EUR/USD, EUR/GBP PRICE, CHARTS AND ANALYSIS:

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EURO GDP REVISION AND FUNDAMENTAL BACKDROP

The Euro outlook continues to look bleak despite a resilient day against the Greenback. EUR/GBP as well seems to be setting up for a bounce following a massive selloff since November 20.

The Euro Area GDP 3rd estimate was out this morning confirming stagnation in Q3 as the Euro area economy feels the pinch. The YoY print managed to avoid a contraction being revised lower to 0% with many sectors struggling in the Euro Area which has prompted market participants to aggressively reprice rate cut expectations. This has weighed on the Euro of late with many believing the ECB may have to cut the most in 2024 to potentially stimulate a sluggish economy.

Source: DailyFX Calendar

Earlier today Goldman Sachs stated their belief that they see rate cuts as early as April by the ECB. The Bank cited a stronger than expected drop in inflation in the months ahead, which could in part be driven by a serious drop-off in demand. Heading into next week Central Bank meetings it will be interesting to gauge the updated economic projections by the ECB and if there any clues as to potential rate cuts.

PRICE ACTION AND POTENTIAL SETUPS

EUR/USD

EURUSD finally arrested its slide in the US session in particular bouncing back above the 1.0800 handle. Not surprising given the key area of support around the 1.0760-1.0750 area, the question now being whether the recovery can continue. US Jobs data may play a key role tomorrow but let’s take a look at key areas of support and resistance that may provide some opportunity.

Immediate resistance for EURUSD rests at the 200-day MA which was tapped today and rests around the 1.0821 handle. A break above this may face some opposition at 1.0840 and 1.0900 respectively.

A continued push back toward and potentially below support at the 1.0750 mark may see EURUSD drop toward the 1.0700 handle where the 50-day MA rests.

Key Levels to Keep an Eye On:

Support levels:

• 1.0760
• 1.0700
• 1.0656

Resistance levels:

• 1.0821
• 1.0840
• 1.0900

EUR/USD Daily Chart

Source: TradingView, prepared by Zain Vawda

EUR/GBP

EURGBP has been caught in a 40-pip range for the last 4 days as you can see by the pink/purple box on the chart below. A breakout of the box could be a sign of further upside. There are conflicting signals however as we have just seen a death cross take place with the 20-day MA crossing below the 200-day MA. This of course hints at bearish momentum while the candlesticks themselves tell a different story, hence my confusion.

There is of course every chance that EURGBP may remain rangebound heading into next week. The ECB Central Bank meeting may provide some clarity for the pair.

Key Levels to Keep an Eye On:

Support levels:

• 0.8550
• 0.8500
• 0.8487

Resistance levels:

• 0.8587
• 0.8636
• 0.8668

EUR/GBP Daily Chart

Source: TradingView, prepared by Zain Vawda

IG CLIENT SENTIMENT

IG Client Sentiment datatells us that 73% of Traders are currently holding LONG positions on EURGBP. Given the contrarian view to client sentiment adopted here at DailyFX, does this mean we are destined to revisit the lows at the 0.8500 mark?

For tips and tricks regarding the use of client sentiment data, download the free guide below.

— Written by Zain Vawda for DailyFX.com

Contact and follow Zain on Twitter: @zvawda