The Euro initially fell during the trading session on Tuesday but found buyers later in the day as we continue to grind towards the 1.1350 level. That being the case, if we can break above that level I think that the market will probably continue to go towards the 1.14 handle, and then possibly even the 1.1450 level where we would run into a ton of resistance. However, there is the possibility that we get a bit of a pullback as we are approaching significant resistance yet again and of course are a bit overbought.
With the Federal Reserve on the other side of the trade looking to soften its monetary policy, I think that we are in the early innings of a game that is going to see this market recover, and there is the possibility that we are forming a “W pattern” as well. Ultimately, I am a buyer but I prefer to see the dips that I can take advantage of.
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The British pound rallied a bit during the trading session on Tuesday as well, as we continue to look at the 1.27 level as potential support. Short-term pullbacks should be buying opportunities but we obviously have a lot of noise surrounding the British pound. I think that there is a major support level extending down to the 1.25 handle, and I think that given enough time we will probably break above the 1.28 handle, because it has offered enough resistance that trying to break above there has brought about several retests. If we can break above the 1.28 handle, then I think the market is probably free to go to the 1.30 level after that. That doesn’t mean it’s going to be easy, but it certainly looks as if the Federal Reserve going to bit more dovish is starting to come into play here.
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