Industrial production in the Eurozone came out worse than expected. That was one of the reasons why EUR reversed sharply against USD. Other reasons include the main trend and the simultaneous strength of the US dollar (higher CPI helped here). On Tuesday, the pair formed a bullish engulfing but this was completely cancelled out on Wednesday by an even bigger bearish engulfing! We are back below the major supports with a strong sell signal. Everything seems clear now – that rise from Tuesday was just a normal price action movement, testing previous supports as new resistances.
Unfortunately for buyers, gold is showing the power of a false breakout pattern. At some point yesterday, the price was above the blue resistance. Buyers did not manage to maintain these higher levels and the price collapsed. Situation is pretty dangerous as we are now challenging the 1,307 USD/oz support, which is absolutely crucial for the mid-term situation on gold.
Now EURGBP. Yesterday, we had important data for both currencies and figures were worse than expected for both. With all this in mind, the pair decided to follow technical analysis and break the lower line of the flag pattern. This could be a false breakout, though. Today, the EURGBP pair is heading upwards and trying to get back inside the flag. Once the price starts making new weekly highs, we will have a denial of the negative sentiment and the way towards the highs from the end of the year will be open.