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There’s not much in the way of top-tier reports in the London session, so I’m looking at this textbook break and retest play as inflection points could hold.

Currency Snapshot:

Major Forex Pairs Price Performance from MarketMilk
Major Forex Pairs Price Performance from MarketMilk

Fresh Market Headlines & Economic Data:

Upcoming Potential Catalysts on the Forex Calendar:

  • German GfK consumer confidence index at 7:00 am GMT
  • German import prices at 7:00 am GMT
  • U.K. Nationwide HPI at 7:00 am GMT
  • Credit Suisse Economic Expectations index at 9:00 am GMT

What to Watch: EUR/GBP

EUR/GBP 1-hour Forex Chart
EUR/GBP 1-hour Forex Chart

The lack of major market releases in the upcoming session could allow near-term inflection points to hold among European currencies, especially with traders taking it easy ahead of the FOMC decision later in the day.

EUR/GBP is currently retesting the broken support around the .8475 area, which lines up with the 38.2% Fibonacci retracement level on the latest slide. Stochastic is already on the move down to indicate that sellers have the upper hand and could take the pair down to the swing low next.

A larger retracement could still reach the 50% Fib, which is closer to the .8500 major psychological mark.

Shorting at current levels with a stop past the 61.8% Fib could be enough to weather the average intraday volatility for EUR/GBP. Here’s MarketMilk’s volatility guide if you’re not sure on where you should put your exits:

EUR/GBP Volatility from MarketMilk
EUR/GBP Volatility from MarketMilk