EUR/GBP Sinks as 'Unbalanced' EU-US Trade Deal Weighs on Euro

EURGBP pared most of its gains on a weak Euro. Intraday bias remains bearish as long as the resistance 0.86750 holds. It hits an intraday low of 0.86256 and is currently trading around 0.86268.

European leaders have widely criticized the recently completed EU-US trade agreement as "unbalanced" and greatly favoring Washington, even though its goal was to prevent a trade war. Flat 15% US tariffs are imposed on most EU exports under the agreement, whereas American products are given tax-free access to European markets. Moreover, the EU has pledged considerable purchases of US energy ($750 billion) and investments in the US ($600 billion), including military equipment. French and German officials have denounced the deal as a "submission" and "capitulation" that will inflict "immense economic damage," particularly due to ongoing US tariffs on EU steel and aluminum and only limited tariff exemptions for European goods. Though the agreement provides temporary stability, critics note that it has a significant long-term economic impact on the EU and weakens transatlantic solidarity.

Technical Accounting

The pair is currently trading below 55 and 200-EMA and 365-EMA on the 1-hour chart.

Bearish Trend Confirmation: Any break below 0.8598 confirms an intraday bearish trend. A drop to 0.8560/0.8520/0.8480 is likely.

Near-Term Resistance:  The near-term resistance is around 0.86750. Any violation above will take the pair to 0.8700/0.8765/0.8800.

Indicator Analysis (1-hour chart)

CCI (50): Bearish

Average Directional Movement Index:  Bearish

Trading Recommendation

It is good to sell on rallies around 0.8648-50 with SL around 0.8700  for a TP of 0.8500.

E