EUR/GBP capped at £0.8470

The recovery from the short-lived move below the £0.84 level has seen the pair trading in a tight range, with the single currency’s strength capped by the £0.8470 level.

As long as we remain below this level and the key moving averages, the bias is for euro weakness. The bearish cross of the 50- and 200-day moving average adds weight to this argument.

The potential for a short squeeze remains in light of last week’s bullish candle, which may see the 50-day moving average tested. A break and daily close below the £0.8380 level will bring this month’s EUR/GBP lows around £0.8350 into sight once again. A break of this level takes the pair back to the £0.8280 zone – the 50% retracement of the July 2012/February 2013 entire move.

Spot FX EUR/GBP (DFB) chart

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