EUR/GBP has managed to sustain positivity as dips were bought yday into the Cloud Base at 0.8890, potentially augmenting bullish risks for a potential rally into the Mar-Apr midpoint at 0.9085. Euro strength stems from German and French led plans for a 500-billion euro EU Coronavirus recovery fund and debt issuance. This has allowed premiums on puts over calls to shrink to their lowest since mid-March (1-month EUR/USD 25-delta risk reversals) aiding a boost in the underlying. This actually reinforces the EUR/GBP breakout that occurred in the back end of last week, where market rammed through the 0.8864 range top and Ichimoku Cloud Base to resolve an intermediate-term basing process.
- Focus is on clearing the 38.2% fib barrier @ 0.8986 to confirm the resumption of topside demand.
- We target 0.9085 then 0.9183, the 61.8% fib.
- MACD widens in bullish territory.