The euro has been bullish again in the early part of the Monday session, as the markets continue to see a bounce play out. Longer-term, this is a market that is still in a downtrend.
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EUR/GBP
The euro has risen against the British pound during early trading on Monday, but at this point in time, it's likely that we are going to continue to see some concerns above offering resistance. Ultimately, the 0.86 level is an area that I'm watching very closely as it has been previous support. So, a significant amount of market memory comes into the picture in that region from what I can tell. Signs of exhaustion would have me shorting this market. And while I do like the pound over the euro, I'm not necessarily looking for something massive here.
I think this is just a market that's a little overdone, and with that being the case, I believe that you have to be somewhat cognizant of the overall trend. And this is going to remain a market that, as usual, will be somewhat choppy, but somewhat driven by interest rate differentials. After all, the British pound has more interest rate power than the euro does. So I still think you have a scenario where traders will prefer to hold the British pound.
Waiting for Signs of Exhaustion
The bounce has been rather strong, and I'm the first to admit that. That would be the reason why I am willing to simply wait a while and look for signs of exhaustion that I can take advantage of. Until we get that, I'm on the sidelines, but I think it is probably only a matter of time before we eventually see some type of return to what we had previously seen.
If we were to close above the 0.86 level, then it could change things, but right now, I think it's just a matter of waiting for the opportunity.