EUR/USD
The EUR/USD pair tried to rally during the day on Tuesday but found the 50 EMA to be far too resistive to continue to go higher. The market rolled over and reached below the 1.17 level, as we continue to grind overall. The 1.1850 level above is the top of the overall consolidation with the 1.15 level underneath being the bottom. We are essentially in the middle, so it’s very difficult to take a trade in either direction. However, if we can break out of this concentration of trading, then I think we could go much higher or lower, depending on the break. The noise in this market continues to be very deafening, as we have so much in the way of headlines out there. I think at this point, you’re probably looking to wait until we get to the outer range of consolidation to put on a trade.
GBP/USD
The British pound tried to rally during the day on Tuesday but then broke down rather rapidly as Teresa May seems to be facing even more pressure from her colleagues. Although she survived a crucial Brexit vote during the day today, the reality is that it’s only a matter time before something comes of all of this. The market has tested the lows again, finding support at the 1.31 handle. I believe that if we can break down below the lows of the day, we will almost certainly test the significant support barrier of 1.30. A breakdown below that would be extraordinarily negative. At this point though, I think the easiest way to trade this market is to simply sell rallies that show signs of exhaustion. Although I think the British pound will eventually recover, we obviously have far too much in the way of headline risk right now for it to do so.
