The euros vs pound pair seems to have found some much needed support in the 0.84 to 0.85 price region and indeed Tuesday’s hammer candle provided further evidence that we may be seeing a rebasing at this level.  Wednesday’s wide spread up bar confirmed this bullish view which was reinforced by a crossing of the 9 and 14 day moving averages suggesting that the recent long down trend may have come to a temporary halt.  The key to whether this is a temporary move higher or a sustained rally, will be threefold:  First we need to see a break above the resistance now in place in the 0.86 region, secondly a break and hold above the 40 day moving average and finally a penetration of the second, and much strong resistance in the 0.88 price region.  If these factors manage to combine then we could see a rally to re-test the 0.90 level last seen back in early May.  One possible driver for such a rally will be this afternoon’s ECB rate decision and statement which is Euro positive could see the Euro rise against both the US Dollar and British Pound.

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