• The Euro has bounced up from 0.8746 but remains capped below the 0.8760 area so far.
• The Pound rallied following the release of a tax-rising UK Budget on Wednesday.
• EUR/GBP trend remains bearish, with the 0.8720 support area in focus.

The Euro hesitates near monthly lows, following a sharp reversal after the release of the UK Budget on Wednesday. The pair has found some support at 0.8745 earlier on the day, but is lacking acceptance above 0.8760, and looks likely to extend its reversal, aiming for the 0.8720 area.

UK Finance Minister Rachel Reeves delivered a tax-raising budget on Wednesday, which soothed investors, whose main concern was the Government's plan to bring the fiscal deficit under control. The market reacted positively, boosting UK bonds and the Sterling higher, and adding further bearish pressure to the EUR/GBP pair.

Technical Analysis: Bears look at the 0.8710 area

The technical picture is bearish, with the pair correcting lower from the mid-November highs above 0.8860. The rejection at a previous trendline support, near 0.8820 on Wednesday, printed an impulsive bearish candle on the daily chart, and confirmed the pair’s negative momentum.

The Euro is clinging to the 61.8% Fibonacci retracement of the late November rally, at 0.8743, but upside attempts remain limited, with the October 27 low, at 0.8720, on the bears’ focus. Further down, the 78.6% Fibonacci retracement of the mentioned cycle is at 0.8710.

On the upside, previous support at 0.8760 is now acting as resistance. Above here, the next targets are the mentioned reverse trendline, at 0.8820, and the November 19 and 20 highs, at 0.8760.