EUR/GBP Price Forecast: Euro bears eye support near 0.8700 

• The Euro approaches two-month lows near 0.8700 after rejection at 0.8740.
• The Pound is behaving better than the Euro in thin year-end trading.
• A potential bullish engulfing candle in the 4-hour chart might announce a further downleg.

A previous EUR/GBP recovery attempt seen on Monday has been short-lived, and the pair found sellers ahead of the 0.8740 area before retreating sharply during the European trading session. The Euro is trading at 0.8710 at the time of writing, only a few pips above the two-month lows, at 0.8705.

The Pound is faring better than the Euro on Monday's thin trading session, with investors bidding their time ahead of the year-end. In the absence of key Eurozone or UK macroeconomic releases, the waning hopes of any relevant breakthrough in Ukraine, coupled with sabre-rattling between China and Taiwan, have hit market sentiment on Monday and are keeping the Euro on the defensive.

Technical Analysis: Euro wavers near two-month lows

In the 4-hour chart, EUR/GBP trades at 0.8715, with the two-month lows, at 0.8707, at a short distance. Technical indicators are mixed. The RSI sits at 41, after failure to return above the key 50 level, while the Moving Average Convergence Divergence (MACD) has turned marginally positive but seems unable to take off from the Signal line and shows a near-flat histogram, suggesting limited momentum.

On the downside, the December 25 low, at 0.8707, and the 78.6% retracement of the October-November rally, at 0.8701, offer interim support, ahead of the mid-October lows, near 0.8670 and the October 8 low, at 0.8655.

Upside attempts, on the other hand, have remained limited near 0.8740 (October 18 low), which keeps the broader bearish trend intact. This level needs to give way to expose the December 19 high, at 0.8775, and the key resistance area around 0.8800.

(The technical analysis of this story was written with the help of an AI tool)