EURGBP Bouncing from the Key 0.8200

EURGBP was down -0.67% to start the week. The war in Ukraine looks set to continue, after Russian President Putin said the Ukrainian government must agree to its demands if the fighting is to end. Citing CNN, Russia has proposed new ceasefires in 5 Ukrainian cities starting at 10:00 Moscow time on Tuesday, March 8 to open evacuation corridors. Moscow said it would reach an agreement with Kiev by 03:00 Moscow time, as Ukraine has not yet formally agreed to the proposal.

Eurozone Sentix Investor Confidence fell sharply from 16.6 to -7.0 in March, well below expectations of 5.1. It was also the lowest level since November 2020. The Current Situation Index fell from 19.3 to 7.8, the lowest since May 2021. The Expectations Index fell from 14.0 to -20.8, the lowest since August 2012.

The Sentix showed, that after Russia’s invasion of Ukraine, the EZ economy collapsed dramatically in March. The assessment of the economic situation fell 11.5 points and expectations fell 34.75 points, more than ever in the history of Sentix. Neither the Coronavirus pandemic nor the banking crisis caused such a sharp decline in future prospects.

Meanwhile, Retail Sales in the UK increased 2.7% on a like-for-like basis (see below)* in February 2022 from a year earlier, slowing from an 8.1% increase in the previous month as retail activity was muted by Storm Eunice and falling consumer confidence. The UK Retail Consortium report also showed non-food retail sales increased 6.9% on a like-for-like basis in February. Helen Dickinson, BRC’s chief executive, said the future looks increasingly uncertain, with current demands not being met. Consumer confidence, which has fallen in recent months, is likely to fall further against the backdrop of current geopolitical events. The cost of living will continue to rise due to global inflation, rising energy bills and rising national insurance this Spring.

Technical Analysis

EURGBP,H4 – The cross is still moving in a downtrend amidst the East European political turmoil that weighs on the euro outlook. The pair bounced off a fresh 6 year low around the 0.8200 round number which coincided with the gap formed in June 2016 with a gain of +0.35%. The intraday bias remains on the downside with the next near term target being the projected FE161.8% at 0.8126 from a drawdown of 0.8477-0.8305 and 0.8405.

On the upside, a break of the 0.8305 resistance is needed to mark a near-term low targeting last week’s gap closing around the 0.8400 round-figure mark. Otherwise, the outlook will remain bearish despite the recovery. The technical indicators on H4 are still on the downward path, although the momentum is slightly reduced, which is most likely due to profit-taking from sellers in the short term. The price of this asset is still below the 200 EMA moving average which is in line with the bearish Kumo. The alligator lines are starting to close, only hinting that consolidation will take effect in the near future.

*adjusted growth metrics, including revenue generated from stores or products with similar characteristics.

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Ady Phangestu

Market Analyst

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