EUR/USD
The EUR/USD pair broke higher during the session on Monday, but then turned back around to form a massive green candle. The candle of course is massive, so that shows quite a bit of bullish pressure in this market. We broke above the 1.0750 level during the day, which of course is very bullish but there is a massive amount of resistance at the 1.0850 level as far as I can tell. Am waiting for some type of exhaustive candle after this impulsive move, because quite frankly most of this was probably predicated upon relief of the non-event reaction to the Italian referendum. Ultimately, I think an exhaustive candle will appear, and it will be a nice selling opportunity in this market.
GBP/USD
The British pound rallied during the day on Monday, as we continue to press higher. I believe that there is a significant amount of resistance of the 1.2850 level though, which was a massive support level on longer-term charts. I believe that this area will offer an exhaustive candle that we can start selling, as this market continues to favor the US dollar longer term. I think that an exhaustive candle will offer quite a bit of “value” in the US dollar as the Federal Reserve is most likely going to raise interest rates, and on top of that has even recently heard William Dudley suggests that it was going to do it more than once.
Ultimately, I think short-term you can go long, but we will eventually see the longer-term bearish pressure return against a currency that is struggling on several fronts. I think the British pound of course has been oversold at times, but given enough time we should continue to see a soft British pound as it not only makes sense due to the exit vote, but also because of the need for a cheaper British pound for exports.
