EUR/USD
The euro initially tried to rally on Tuesday but turned around as the 1.08 level has offered resistance. The fact that we did suggests that we are going to drop from here and go reaching to lower levels. It has been in a longer-term downtrend anyway, so with that I feel that this is simply a continuation of what we’ve seen. The market should reach down towards the 1.05 level, which has been so supportive, and is a major level this market. I believe that we will eventually break down below there, and once we do we should reach towards the parity handle. Any rally at this point in time the show signs of exhaustion should be a selling opportunity, and I believe that the US dollar will continue to be the favored currency by the Forex world.
GBP/USD
The British pound initially tried to rally during the day but turned around to form a resistive candle. This is interesting to me because we are near the 50% Fibonacci retracement level, and with that I feel that if we can break down below the bottom of the candle we should reach towards the 1.25 handle. The uptrend line for the previous uptrend channel should continue to be interesting as well. I believe that given enough time we will reach towards that area and test for support. If we break down below the 1.25 level, the market should reach towards the 1.2350 level. I feel that rallies at this point in time will probably be sold into, and that the 1.2850 level above is going to continue to be massively resistive, as it was so massively supportive over the longer term. On top of that, we have the 61.8% Fibonacci retracement level just above there. With so many growing pains coming out of the United Kingdom, it makes sense that we will continue to show weakness over the longer term.
