The Euro went back and forth during the trading session on Monday as we are trying to get a grasp on where we are going next. We are at the highs of the recent range, but one can see a “W pattern” be informed from the recent action. If we do pull back from here, and we very well could, I believe that the 1.1250 level underneath is the beginning of significant support where value hunters will come back in and pick up the market. In fact, I believe that a lot of this comes down to the Federal Reserve stepping away from its hawkish attitude, so therefore we could continue to see a lot of softness when it comes to the greenback, and by extension, that almost automatically will push the Euro higher as it is considered to be “anti-dollar.”
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The British pound fell during early trading on Monday, slicing through the 1.27 level before bouncing just a bit. Ultimately, the market looks as if it is continuing to find a bit of support in this region, and the 1.2750 level above will probably be a bit resistive, perhaps extending to the 1.28 level. If we can clear that 50 pip range, it’s very likely that we could go to the 1.30 level. Ultimately, it looks as if we are trying to form a bit of a floor, as the British pound is oversold. The 1.25 level underneath will be massive support though, so if we were to break down below there it’s likely that we could drop as low as the 1.20 level. Remember, the Brexit still goes on so this will be very tenuous trading but I do think that it’s gotten cheap enough that people are interested, especially considering that the Federal Reserve looks dovish.
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