EURGBP Rectangle Pattern (Sept 14)

Price is on its way up to test the top of the range once more while stochastic is moving down from the overbought zone, suggesting that the resistance might hold.

If so, a move back to the range support might be in order. RSI is also on the move down, confirming that buyers are already exhausted and might allow sellers to take over. Meanwhile, the 100 SMA is below the longer-term 200 SMA, which suggests that the path of least resistance is to the downside.

There are plenty of event risks lined up from the UK this week, which suggests that volatility might pick up and spur a breakout. The UK CPI readings are due tomorrow, with the headline figure slated to fall back from 0.1% to 0.0% in August. After that, the jobs report is lined up for Wednesday and a 5.1K drop in joblessness is expected. Lastly, the retail sales report is up for release on Thursday and a 0.2% uptick is eyed.

As for the euro, the downbeat ECB rhetoric is currently weighing on the shared currency. Although Governor Draghi didn't make any actual changes to monetary policy, he admitted that the weakening inflationary pressures could lead them to ease again if necessary.

By Kate Curtis from Trader's Way