The cross accelerates lower after pound got boosted by UK earnings beat (3.4% vs 3.3% f/c, as pay growth hit 10-year high) and upbeat employment data (employment grew 141K in three months to the end of Nov vs 88K f/c and previous period’s 79K growth).
Negative German ZEW data, although economic sentiment weakened less than expected (Jan -15 vs -18.4 f/c) added to negative sentiment.
Monday’s strong upside rejection (recovery was capped by 200SMA at 0.8861) left bearish daily candle with long upper shadow that weighs on near-term outlook.
Strong bearish momentum and daily MA’s in negative setup, with a number of bear-crosses, add to bearish sentiment.
The pair focuses key near-term support at 0.8763 (17/18 Jan double-bottom / Fibo 76.4% of 0.8656/0.9113), violation of which would open way for full-retracement of 0.8656/0.9113 rally.
Bearish structure is expected to remain intact while the price holds below 200SMA.
Res: 0.8830, 0.8861, 0.8880, 0.8902
Sup: 0.8763, 0.8696, 0.8656, 0.8620