EUR/GBP dives to fresh session lows, below mid-0.9000s

• EUR/GBP witnessed a dramatic intraday turnaround from three-week tops.
• The impasse over the EU recovery fund kept the euro bulls on the defensive.
• A sudden pickup in the GBP further contributed to the pair’s sharp intraday fall.

The EUR/GBP cross continued losing ground through the mid-European session and tumbled to fresh daily lows, around the 0.9045-40 region in the last hour.

The cross failed to capitalize on its early positive move to three-week tops, instead witnessed a dramatic turnaround from the 0.9135-40 region. The fact that the European leaders are yet to reach a deal on the rescue package kept the euro bulls on the defensive and kept a lid on the EUR/GBP pair's intraday positive move.

It is worth reporting that negotiations on the proposed €750 billion coronavirus recovery fund aimed at aiding the region’s worst-hit economies stretched for the fourth straight day on Monday. Investors seem convinced that policymakers are moving closer to a compromise, though seemed reluctant to place fresh bullish bets.

Apart from this, a sudden pick up in the demand for the British pound further contributed to the pair's fall of nearly 100 pips. Meanwhile, the GBP strength lacked any obvious fundamental catalyst and runs the risk of fizzling out rather quickly. Hence, any subsequent fall in the EUR/GBP cross might still be seen as a buying opportunity.

Hence, it will be prudent to wait for some strong follow-through selling before confirming that the cross might have topped out and positioning for a further depreciating move. The key 0.9000 psychological mark is likely to act as strong support, which if broken might be seen as a fresh trigger for bearish traders.

Technical levels to watch