EUR/GBP - 100-day MA caps upside, yield differential favors breakout

• EUR/GBP bulls need progress soon as 100-day MA plays spoilsport.
• 10Y German (DE) - UK bond yield spread at a 4-month high.

EUR/GBP has had a tough time keeping the gains above 100-day MA in the last three trading sessions. The moving average has proved a tough nut to crack since last November.

More importantly, in the recent past, back-to-back failures at the moving average hurdle yielded a pullback. Hence, EUR bulls need progress soon, i.e. the cross needs to close today above the 100-day MA level of 0.8895. Another failure could prove costly as history suggests.

That said, the yield differential favors an upside break in the EUR/GBP pair. The difference or the spread between the 10-year German and UK bond yield rose to -0.736; the highest level since mid-September. A week ago the spread stood at -0.825.

However, the spread could drop in the GBP positive manner if the UK inflation numbers due today beat estimates.

EUR/GBP Technical Levels

Commerzbank Analyst Karen Jones writes, "key near-term resistance is the .9034 October 12, 2017, high. This remains the barrier to the 0.9071/0.9175 61.8% and 78.6% Fibonacci retracements. Below .8808 would retarget the .8697 recent low.”