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EUR/GBP struggles to extend pullback from 11-week high.
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US Treasuries retreated from three-week peaks, EU bond coupons grinded near 11-year highs but gilts remained depressed.
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Russia’s geopolitical fears add to China’s Covid woes but lack of market participation, absence of key data disturbs traders’ momentum.
EUR/GBP remains sidelined around 0.8825, after reversing from a nearly two-month high the previous day, as traders seek more clues amid the market’s indecision headline into Thursday’s London open.
Even so, the cross-currency pair remains pressured as the geopolitical concerns surrounding Russia and fears of economic slowdown propel the Eurozone Treasury bond yields while the UK’s Gilts dropped to the lost levels for seven weeks.
Russia’s rejection of peace with Ukraine unless it accepts the deal to allow additional territories joins an extended battle in the city of Kherson to weigh on sentiment. Along the same lines could be the notification of major countries to require Covid tests for travelers to China amid suspicions about Beijing’s data reporting and hidden jumps in virus numbers.
It is worth noting, however, that the relatively strong bias of European Central Bank (ECB) policymakers versus Bank of England (BOE) decision makers challenges the EUR/GBP bear. Even so, the chatter surrounding Block’s meltdown seems to have gained more attention of late, which should have resulted in the bears recalling earlier in the day.
Against this backdrop, the US 10-year Treasury yield fell 2.8 basis points to 3.86% by press time, the largest increase since October 19 the previous day. That said, eurozone 10-year Treasury bond yields rose to their highest level since July 2011 before retreating to 2.51% while UK 10-year gilt coupons fell for a third straight day to refresh multi-day lows.
Looking forward, the EUR/GBP is likely to witness more inaction but the recent escalation in the Russia-Ukraine fight and the economic slowdown fears surrounding the bloc could weigh on the prices.
Technical analysis
Despite the failure to cross the 0.8855-65 resistance zone, comprising multiple levels marked since late September, EUR/GBP remains on the bear’s radar unless breaking the 200-DMA support, close to 0.8575 at the latest.
ADDITIONAL IMPORTANT LEVELS
