The EUR/GBP pair is trending up since the formation of bullish hammer at the bottom on October 1st. Today, traders were showing a cautious behavior ahead of the German CPI and the Euro economic sentiment releases. Both of these releases are considered as market movers and can change the story completely.
The pair opened the Asian session at 0.7926. Moving high, the pair is restricted by the resistance around 0.7933–the 50% fib level–and is dragged back to the current trading price around 0.7915. Even if this resistance is breached, there is another resistance ahead around 0.7950, the 61.8% fib level.
Today’s economic calendar had a few key releases due for both GBP and Euro.
Core Consumer Price Index
The consumer price index for this September was estimated at 1.9% by analysts, as compared to the 1.8%, the reading of August, the actual outcome however came out 1.5%, worse than the expectations. Released by National Statistics, CPI is the key indicator of inflation. In general, a high reading is bullish, while a low reading is bearish for the GBP.
Consumer Price Index (YoY)
The yearly CPI is also a major indicator of inflation and was forecasted to decrease to 0.4% this September from 0.5%, the august reading. The actual outcome however remained 0.2%, missing the projection by a long shot. In general, a low reading is considered bearish for GBP and vice versa.
ZEW Survey – Economic Sentiment
The ZEW survey was forecasted to drop to 1.0 for this October from 6.9, the reading of September. The actual outcome remained -3.6, much weaker than the forecast. Published by the Zentrum für Europäische Wirtschaftsforschung, it measures the sentiments of institutional investors. Generally speaking, the Euro appreciates if the sentiment is optimistic and depreciates if the sentiment is pessimistic.
In the light of fundamental and technical analysis, a cautious behavior is preferred following the economic releases. It is better to wait for the daily candles to close and then open the positions accordingly.