The $uros to poundsrong> pair continued its slow recovery yesterday, following the recent sharp sell off, which saw the pair break below the recent sideways consolidation between 0.9150 and 0.8850, to retest support in the 0.86 region earlier in the month. Indeed this hammer candle marked the turning point in the short term, and since then this signal has been validated by a steady move higher, which has been characterized with solid support from the 9 and 14 moving averages from below.  Yesterday’s candle provided further evidence of the bullish sentiment for the euros to pounds pair once again, ending the day marginally higher, but with a deep lower wick to the lower body, with the low of the day finding good support from the 9 day moving average once again. In the short term we are now approaching several key levels simultaneously, which will dictate the longer term direction on the daily chart. First we are very close to to 200 day moving average which now sits directly above, and we will need to see this breached in the next few days. Secondly we are also close to the 40 day moving average , and once again we need to see a break and hold above this key indicator. Finally we are now running into the deep potential resistance which begins at 0.8850, and once again for the current momentum to be maintained we need to see a penetration of this deep area of congestion.

Whilst the technical picture is relatively clear, the broader picture concerning Greece is less so, with today’s meeting of EU ministers seminal in stitching together a rescue package for the beleaguered country. However, it will be the tone of the statement and any associated comments from the ECB that will dictate the fortunes for the euro in the short term. With the Greeks refusing to lay their cards on the table, and the Germans suggesting that any package must be backed by deep cuts in the Greek budget, it is a question at present of who will blink first. The currency speculators are currently selling the euro in ever increasing volumes against the dollar, but against the UK pound of course it is a different story, with sterling suffering its own woes, and from the current daily chart. likely to fall a great deal further given the recent breakout on the daily chart. Fundamentally of course for this pair it is simply a question of which currency is more of a basket case than the other! At present the euro is winning, and provided we see the technical levels breached, then  this upwards trend should continue in the short term, particularly if the news later from the EU meeting is euro positive which is likely.

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