EUR/USD
The EUR/USD pair fell slightly during the day on Monday, as we continue to digest gains. It looks like we are going to try to break above the 1.18 handle, and perhaps go to the 1.19 level after that. I believe that the 1.17 level underneath should continue to be an area where buyers get involved, as this area had been supportive a few sessions ago. Because of this, I’m a buyer of dips and believe that the EUR/USD pair is still very much in an uptrend. It’s not until we broke down below the 1.17 level on a daily close that I would consider selling, and even then, I think it’s only short-term, perhaps a move down to the 1.15 handle. The recent selloff in this pair was more or less due to an overextension than anything else.
GBP/USD
The British pound had a slightly negative session on Monday, but continues to find resiliency near the 1.2950 level just below. Because of this, I believe that it’s only a matter of time before we break out to the upside and start grinding towards the 1.32 level just above. However, if we were to break down below the 1.2950 level on a daily close, then I think that the pair starts to unwind a bit, probably reaching towards the 1.2850 level, and then the 1.26 handle. In the meantime, my base case scenario is still that we will eventually find buyers, and can go long. Going to wait for some type of impulsive candle to print in the market before putting money to work though, because quite frankly this is a market that seems to be running on several different headlines at the same time. Ultimately, I will let the market dictate which direction I trade.
