The Euro fell rather hard during the trading session on Monday, slicing through the 1.13 level like it wasn’t even there. However, I think at this point it’s probably a bit overdone and there is certainly a lot of interesting support areas between here and the 1.12 level. It’s because of this that I believe that the market is negative, but it’s probably somewhat limited in its ability to reach lower. Yes, the European Union has a lot of issues but at the same time the Federal Reserve will do whatever it can to keep the markets saw for the US dollar. I think at this point, it’s only a matter of time before we bounce but we obviously don’t have that signal quite yet. If we break above the 1.13 level, then that could be assigned that the buyers are getting ready to come back in and push towards the 1.1450 level above.
The British pound broke down below the 50 day EMA significantly during the trading session on Monday, and it looks as if the British pound needs to reset somewhere near the 1.2850 level underneath. That’s an area that has been massive support in the past, so I think it’s only a matter time before we bounce. However, we could drop as low as the 1.27 level, so it’s very likely that sellers will find it a bit hard to break down through this area. The market is held hostage to the random noise coming out of politicians, and of course the occasional headline on twitter. However, I do think we have bottomed with the British pound so it’s only a matter of time before the buyers come back. I will be on the sideline in the meantime waiting for a bounce or supportive candle.
All copyrights for this article are reserved to Daily FX