EUR/GBP holds below 200-day MA

• Technical failure triggers sell-off.
• UK-German 10-yr spread favors EUR.

EUR/GBP fell below the 200-day MA yesterday, seemingly due technical failure at the 100-day MA.

The pair spent the better part of the last week battling offers around the 100-day MA, then positioned around 0.89 levels. However, the moving average proved a tough nut to crack. The repeated rejection at the key technical hurdle finally made way for the bears.

The currency pair closed yesterday at 0.8808 and was last seen trading at 0.8825 levels. Despite being mildly bid, the cross is still below the 200-day MA level of 0.8832.

That said, the drop does not look sustainable if we take into account the recent drop in 10Y UK-German yield spread (from 82.5 basis points to 73.6 basis points). The spot may recover above the 200-day MA if the spread drops further in the EUR positive manner.

EUR/GBP Technical Levels

A break below 0.88 (zero levels) would open doors for 0.8761 (Dec. 14, Dec. 15 low), under which a major support is seen at 0.8689 (Dec. 8 low). On the higher side, breach of resistance at 0.8832 (200-day MA) would expose the 100-day MA of 0.8887 and 0.89 (zero levels).