EUR/USD
The EUR/USD pair rallied a bit during the day on Monday but has given back most of the gains. I think we will continue to consolidate just below the 1.18 level, at least until we get the meeting out of the way between the US and North Korea. I believe that there is support underneath near the 1.17 level, and that the market is essentially beginning to “hold its collective breath” as to how that meeting will turn out. If we can break above the 1.1850 level, then the market will continue to go higher, perhaps reaching towards 1.20 level. Pullbacks at this point should continue to find plenty of support near the 1.17 level, unless of course there is some type of meltdown after bad news coming out of that meeting. If that happens, I think we will revisit the 1.15 level underneath.
GBP/USD
The British pound initially tried to rally during the day on Monday but gave back most of the gains to fall towards the 1.3350 level. I think that the market should continue to be very noisy, but I think the 1.33 level will be supportive, and I think that any test of that area will attract a lot of attention, perhaps even value hunters. If we break down to a fresh, new low, the market will unwind towards the 1.30 level underneath there. The alternate scenario is that we break above the 1.35 handle, and then go looking towards the 1.3650 level after that. This is a market that continues to be very choppy overall, and I think that the proclivity of this market is that we are trying to find higher levels, but it may take some effort to get there. I don’t think that we will make that move until after the meeting.
