EUR/USD
The EUR/USD pair pulled back during the trading session on Monday, but turned around to show signs of support, forming a nice-looking hammer. The hammer sits just below the 1.23 level, suggesting that there is a lot of bullish pressure to break out above that level. If we can clear that area, I think the 1.24 level should be the next target, and then eventually the 1.25 level. Underneath, I think that the 1.21 level is going to be massively supportive, as it was previous resistance. Ultimately, this market should continue to see plenty of buyers looking for value, and I think that as the risk appetite continues to build up after last week’s volatility and concern. I believe that we will see buyers start to come out and pick up this market.
GBP/USD
The British pound has fallen during the day on Monday, reaching down towards the 50-day EMA underneath, an area that should cause a bit of buying pressure. Also, we have the 1.28 level underneath offers support, but minor at best. If we break down below there, I think the market will then go looking towards the 1.3650 level underneath, which was a massive resistance barrier previously. It should now be supportive at this point, and I think that given enough time we should continue to see buyers pick up the British pound as the US dollar continues to sell off in general. Remember, this market is also highly linked to risk appetite, so pay attention to the US stock markets, especially the S&P 500 as it is a good proxy for that risk. I don’t think we break down here, but if we do, I suspect that the uptrend line is the next major area of support.
