EUR/USD
The Euro initially fell during trading on Monday but then turned around to show signs of strength towards the end of the day. We are still below the vital 1.15 handle, so as long as we are below there, I think there is a significant amount of selling pressure still to be found. If we can break above the 1.15 handle, then we will test the 1.16 handle. If we do that, we will then break above the 200 day EMA. Otherwise, if we show signs of exhaustion between here and the 1.15 handle, then I think we roll over again. It does look like we are trying to form some type of rounded bottom though, so the buyers certainly are trying to make an argument for their case, so a pullback at this point could very well be short lived at best.
GBP/USD
The British pound rallied significantly during the trading session on Monday, breaking above the 50 day EMA before rolling over. However, we have close above the 1.27 level which of course is a psychologically important accomplishment. If we can break above the highs of the trading session on Monday, then we could go looking towards the 200 day EMA. I can’t help but think that this might have been a bit of short covering going into New Year’s Day though, so you could be seeing a bit of a “bull trap.” If we rollover and break below the 1.27 handle, then we could see this market break back down towards the 1.22 handle, which is where the descending triangle suggested we were going. There are still plenty of concerns when it comes to the Brexit, so I think it won’t take much to send this market right back down.
