EUR/GBP: heading for a break of the 10- D SMA

• EUR/GBP to break up above the 10-D SMA?
• EUR/GBP forced higher on lower DXY and GBP/JPY supply.

EUR/GBP has been recovering from below 0.8720 as the euro advances full steam ahead vs the greenback making fresh highs on the day, extending the freak bid to 1.2385 earlier.  Currently, EUR/GBP is trading at 0.8763, up 0.22% on the day, having posted a daily high at 0.8777 and low at 0.8716.

In the European shift, the pound made it to 1.4275 as a 6-day high by more fix-related buying of GBP again which has been a theme of late, (EUR/GBP fell to a 1 week low of 0.8718). 

However, bulls were capped due to the UK mgf PMI miss at 55.3 compared to 56.5 forecasted and the price dropped to 1.4226 and then to 1.4256 on political concerns (British minister preparing to resign and denounce PM May-Sun newspaper) enabling the cross higher and off the aforementioned lows while European PMIs were more promising, (EZ manufacturing boom extending into 2018). GBP/JPY is influencing the supply side in cable as well. 

DXY making fresh lows

Meanwhile, the dollar is under pressure within the day's range of 88.767 - 89.328 in the DXY (heavily weighted to the euro), extending its sell-off to fresh lows as we walk into February's business. Bulls are running for cover despite the hawkish FOMC outcome and today's mixed US data, (note a decline in employment):

Markit manufacturing PMI arrived at 55.5 (vs 54.9) while the ISM manufacturing index reached 59.1 (vs 58.8).  Details of the ISM included a decline in the employment index to 54.2 from 57.2 and a slide in the new orders index to 65.4% from 67.4%.

EUR/GBP levels

The price is constructively bullish above the 61.8% retracement of the move seen for this present year at 0.8697. Another test of 0.8772 (descending 10-D SMA) would open the case for a test of 0.8928, (11th Jan 2018) with 0.8960 then on the cards.