Euro Falls Against Pound Amid Market Caution and Rising Oil Prices

The Euro (EUR) has extended its losses against the British Pound (GBP) for the second consecutive day, weighed down by a cautious market mood and rising oil prices. The EUR/USD pair remains below the 0.8550 threshold after hitting two-week lows at 0.8536 on Monday.

Strategists at Rabobank caution that despite the Eurozone's economy seemingly weathering higher energy prices and supply disruptions, the breakdown of the US-Iran peace agreement implies downside risks to growth and upside inflation concerns, posing a heavy weight on the Euro.

The EUR/GBP pair broke an ascending channel in late July and confirmed a bearish reversal this week after slipping below 0.8550. Momentum indicators endorse the bearish view, with the 4-hour Relative Strength Index (14) hovering in the mid-30s and the Moving Average Convergence Divergence (MACD) at slightly negative levels.

Initial support emerges at 0.8530, a previous low from July 24, while below here, a previous resistance area around 0.8510 comes into play. On the topside, breaking 0.8550 could shift price action back to the previous ranges and focus on Monday's highs around 0.8566 and August 5-6 highs near 0.8580.