The European currency gained momentum on Tuesday as falling crude oil prices provided significant support to the Euro. The EUR/GBP cross accelerated its recovery, approaching the range top near the 0.8360 mark. On the other hand, a hawkish policy stance from the Bank of England has helped limit downside risks for the British Pound.
EUR/GBP Technical Outlook: Key Resistance and Support Levels
From a technical standpoint, buyers looking to extend the EUR/GBP recovery must clear resistance in the 0.8360-0.8365 range, which aligns with the highs recorded on October 30 and November 3. A decisive breakout above 0.8360 would validate a bottom formation at 0.8320 and pave the way for a test of the 0.8400 zone, corresponding to the October 26 high.
Continued bullish movement beyond this target could point toward the October 19 and 20 peaks near 0.8430. Conversely, if the pair faces selling pressure and breaks below the lower range boundary at 0.8320, initial support is anticipated near the late February 2025 highs just above 0.8300. Further downside movement could push the exchange rate toward the 2025 trough at 0.8246.
Broader Foreign Exchange Movements: AUD/USD and USD/JPY
Among major currencies, the Euro demonstrated its strongest performance against the Australian Dollar on Tuesday. The AUD/USD pair struggled to build on its previous recovery, remaining under pressure near the 0.6900 psychological level following a reduction in China's trade surplus. Additionally, rising market expectations for a December rate increase by the US Federal Reserve stemmed the US Dollar's recent decline.
In the Asian trading session, USD/JPY attracted buyers, pushing the exchange rate back above 158.00. A contraction in Japanese Household Spending overshadowed the hawkish tone of the Bank of Japan Summary of Opinions. Expectation of further US policy tightening also provided backing to the safe-haven US Dollar.
Gold Pulls Back while Bitcoin Drops Below $75,000
Precious metals experienced increased supply as Gold surrendered part of its recent gains near the $4,150 resistance area. Nevertheless, bullion held ground above the $4,100 threshold heading into European trading hours. High US interest rate expectations continue to weigh on non-yielding assets, though uncertain diplomatic signals between the US and Iran have kept Dollar gains in check.
In digital assets, Bitcoin slid below the $75,000 mark on Tuesday. This followed its lowest weekly close since August, as persistent selling pressure pushed recent market entrants into loss-making territory.
US Economic Indicators and Upcoming Inflation Catalysts
Recent economic data from the United States revealed unexpected strength in the labor market. Nonfarm payrolls surged by 165,000 jobs, substantially outperforming the consensus estimate of 65,000. Concurrently, the unemployment rate declined to 4.1% from 4.2%, while average hourly earnings rose by 0.4% to reach $32.75.
Market participants are now turning their attention to crucial US inflation metrics. The Consumer Price Index (CPI) report is scheduled for release tomorrow, followed by the Producer Price Index (PPI) report on Friday, which will provide further clarity on the Federal Reserve's interest rate trajectory.
