EUR/USD
The EUR/USD pair initially tried to rally during the course of the session on Tuesday, testing the 1.16 level. However, we turned right back around to form a massive shooting star, and it looks as if we are trying to pull back. Yes, I recognize that this is a very negative sign, but at the end of the day there should be more than enough support near the 1.14 level to keep this market going higher. I believe that a pullback and a supportive candle is reason enough to start buying the Euro, just as a break above the top of the shooting star would be. I have no interest whatsoever in selling this pair, and believe that we are destined to grind our way higher over the longer term.
GBP/USD
The GBP/USD pair initially rallied during the day on Tuesday, but turned around to fall rather significantly. We are testing the 1.45 handle, and that suggests that the buying pressure underneath is going to come under scrutiny today. The 1.45 level extends down to the 1.44 level for support, so I think that we very well could see the buyers reenter this market, we need to see a supportive candle on a daily close in order to have me buying this market. A break above the top the candle would of course be a buying opportunity as well, but I am the first person to admit that this candle is very ugly.
I still believe that over the longer term this pair will underperform the EUR/USD pair, because of the potential exit from the European Union buying the United Kingdom, and as a result there’s a little bit of a weight around the neck of the British pound at the moment. Given enough time though, I think that we will grind our way higher, it’s just going to be slower than in the Euro.
