EUR/USD
The EUR/USD pair initially tried to rally, breaking above the 1.12 handle. That is essentially “fair value” during the recent consolidation, so the fact that we turned around from there and rolled over suggests that we are going to go down to the 1.11 handle. A breakdown below there should send this market down to the 1.10 level again. Alternately, if we can break above the top of the candle for the day on Monday, I think the market will then go look for the 1.13 handle above. Either way, I’m looking at a choppy market that is going to make short-term moves more than longer-term moves in the near term.
GBP/USD
The British pound initially tried to rally during the day on Monday, but found enough resistance to turn around and drop towards the 1.27 handle. The shooting star like candle should send this market down to the 1.26 level underneath. Because of this, if we can break down below the bottom of the candle, I think that the market continues to drop to that level. Alternately, if we can break above the top of the shooting star for the day, that could send this market to the 1.28 level above. I think that the markets will continue to be volatile due to the various headlines that will be coming out of both London and Brussels, but given enough time I think that the markets will favor the British pound. This is simply because it has been oversold in the central bank seems a bit more hawkish than once thought. This being said, I believe that we need to see some type of impulsive candle to the upside or a very supportive candle to begin to even think about buying.
