Euro Drops After ECB Rate Cut, Pound Consolidates Near 1.2600
EUR/USD
Euro buyers were unable to overcome resistance at 1.0620–1.0600. Following a sharp decline in November, the pair attempted a recovery and made several attempts to hold above 1.0600, but so far, all efforts have failed.
Yesterday, the European Central Bank (ECB) meeting delivered a widely anticipated 25-basis-point cut to the base rate, lowering it from 3.25% to 3.00%. In response, EUR/USD saw a sharp decline, breaking below key support at 1.0500.
Technical analysis of EUR/USD suggests the possibility of a further bearish impulse if the price breaks the recent low near 1.0340. The downward scenario would be invalidated if the pair manages to secure a strong close above 1.0620.
Key events for EUR/USD pricing today:
→ 10:00 (GMT+3): German trade balance data.
→ 11:00 (GMT+3): Harmonised Consumer Price Index (HICP) for Spain.
→ 13:00 (GMT+3): Eurozone industrial production data for December.
GBP/USD
The return of sellers has also been evident in GBP/USD. After testing key resistance at 1.2810–1.2790 for several days without sustaining upward momentum, the pair fell back below 1.2700.
Technical analysis of GBP/USD points to the potential continuation of the downward trend, as a bearish “tower” pattern is forming on the daily timeframe. The nearest support levels are at 1.2620–1.2600. If the pair consolidates below these levels in upcoming sessions, a retest of November’s yearly lows near 1.2490 is likely.
Key events for GBP/USD pricing today:
→ 10:00 (GMT+3): UK GDP data for October.
→ 10:00 (GMT+3): UK manufacturing production data.
→ 16:00 (GMT+3): Monthly GDP tracker release by NI.
