EUR/USD
The EUR/USD pair initially rallied during the day on Monday, but then turned right back around to form a bit of a shooting star. The shooting star of course is a very negative sign, but I do see quite a bit of noise just below and as a result, even if we break down from here I think it will be a bit of a grind lower. I think there is a massive amount of support at the 1.12 level though, so the selloff at this point in time in my opinion will be short-lived. On the other hand, if we get a break above the top of the shooting star for the Monday session, I believe that the buyers will come into the market and force their way towards the 1.15 handle.
GBP/USD
The GBP/USD pair went back and forth during the course of the day on Monday, as the market tested the 1.44 handle. This area had previously been resistive, and now should be supportive. If we can break above the top of the range, I feel that this market could go higher, perhaps reaching towards the 1.47 level. If we break down below the bottom of the range, we could find yourselves reaching towards the 1.41 handle, but it is probably going to take quite a bit of effort as there is so much noise between here and there. I would look for short-term rallies that show signs of exhaustion that we can start selling again.
Either way, this is a market that’s probably going to have quite a bit of noise in it, so at this point in time the market breaking out above resistance recently and then pulling back could be a decent opportunity take advantage of “value”, but regardless what happens you can expect quite a bit of noise. Both of these currencies have to deal with their own issues, so expect a rocky path forward.
