EUR/USD
The EUR/USD pair went back and forth on Monday, testing the 1.09 handle. This is an area that continues to be attractive to traders on both sides of the spectrum, and with Monday being made a, it makes sense that there could have been a lack of volume. However, we have recently broken out to the upside so I think that the gap below will continue to offer quite a bit of support. That is an area that should attract quite a bit of buying pressure. The 1.0750 level underneath continues to be the “floor” in the market, and with this being the case I’m looking to buy on the dips. Short-term traders will continue to like the range bound type of situation as well.
GBP/USD
The British pound fell a bit during the session on Monday, but again of course we have just had the May Day celebrations, which of course would naturally work with lesser volume. I believe that the 1.2750 level underneath continues to be support, and I think that it’s only a matter of time before the buyers return on a pullback. I like the idea of reaching towards the 1.30 level above, and after that the 1.3450 level after that as it is the top of the previous consolidation area. I think that the British pound will continue to break out and grind much higher, as it has certainly broken above a major barrier. As long as we have more of a “risk on” type of marketplace overall, it’s likely that the British pound will continue to rally. I have no interest in shorting this market, least not until we break down below the 1.2750 level underneath, on a daily candle. If that happens, I think we would probably drop to the 1.2550 level but I do not expect it to happen.
