EUR/GBP breaks below 0.8400 handle to fresh three-week lows

The EUR/GBP cross failed to build on early tepid recovery move and has now dropped to fresh three-week low, below the 0.8400 handle. 

The cross has maintained its offered tone so far this week and traded with bearish bias for the fourth consecutive session amid fading optimism surrounding the shared currency led by pro-EU Emmanuel Macron’s victory in Sunday’s French presidential election.

Meanwhile, the incoming UK economic data (last week's upbeat PMI reports and the latest BRC Like-for-like Sales data for April 2017) has been showing the British economy's resilience, despite continuing jitters over impending Brexit negotiations, and has collaborated to the British Pound's outperformance against its European counterpart. 

   •  GBP/USD testing session highs near 1.2960

Investors on Wednesday will remain focused on the ECB President Draghi’s speech, later during the day, where any comments on the central bank's monetary policy stance should infuse a fresh bout of volatility across Euro crosses. 

   •  ECB: President Draghi’s speech in focus – Danske Bank

Technical levels to watch

Immediate support is pegged near 0.8375-70 region, below which a fresh leg of weakness is likely to drag the cross below 0.8350 intermediate support towards testing yearly lows support near 0.8315 region.

On the upside, 0.8415 level seems to have emerged as immediate hurdle, which if cleared might prompt some short-covering move towards 0.8455-60 horizontal resistance en-route the key 0.85 psychological mark.