EUR/USD
The Euro fell rather hard during trading on Tuesday, crashing into the 1.12 level. We even managed to break down below there, so that of course was a very bearish turn of events. That being said, the market did bounce a bit from the 1.12 level again, an area that has been massive support. One thing that I do know, if this keeps up the support underneath will be broken. At this point, I believe that market participants are starting to get a bit more aggressive as the highs are getting lower, so I have no interest in buying this pair until we make a “higher high.”
That brings up the downside, which isn’t really available until we break down below the 1.1150 level, because it would chew through a lot of support and perhaps open the door to the 1.10 level. All things being equal, this is a market that’s probably best left alone until we make an impulsive move.
GBP/USD
The British pound initially tried to rally during the trading session on Tuesday but found the area above the 1.30 level to be far too resistive to overcome. We have broken through the bottom of the descending triangle and it now opens up the door to much lower pricing. That doesn’t mean that we are going to collapse, and quite frankly I don’t think we will. I believe that it’s more of a slow grind lower as there is no real reason for the British pound to attract a lot of money as we are still going on about the Brexit and there doesn’t seem to be any real progress made other than the delay of leaving. Ultimately, I believe that we will probably go looking towards the 1.128 level and then perhaps even the downtrend line underneath.
