EUR/USD
The Euro rallied significantly during the trading session on Tuesday, reaching towards the 1.13 level that had previously been support. It is now resistance, and I think that the fact that we pulled back towards the lower levels after that suggests that we are going to continue to go lower. I think the 1.12 level underneath is the first target, and then eventually the 1.11 level which is a massive support level on the longer-term charts. Ultimately, I am a seller of the Euro, as there are a lot of negative economic figures coming out of the European Union, and the Federal Reserve is looking to raise interest rates over the longer-term. Ultimately, the market favors the downside, and I don’t have any interest in buying this market until we break above the 1.15 level at the very least. Overall, short-term rallies that show signs of exhaustion would be opportunities to take advantage of.
GBP/USD
The British pound skyrocketed during the trading session based upon twitter headlines yet again, but like any other time we have faded as second-guessing became part of the game. Algorithmic trading continues to push this market to the upside based upon these rumors, which have been easy money if you’re willing to sell them after things slow down. The downtrend line should continue to push this market to the downside, reaching towards the 1.27 level eventually. I think that if we broke above the downtrend line though, it could send this market to the 1.35 level above. Ultimately, this is a market that continues to favor fading rallies as the US dollar of course has so much in the way of hawkish pressure behind it based upon the interest rate expectations coming out of the United States.
