Euro falls against Sterling again on Tuesday

The Euro fell during the trading session on Tuesday, reaching down towards the 0.87 level where it found a bit of support. However, I think it’s only a matter of time before that support gets broken, and we go looking towards the 0.87 level underneath. The market should continue to show a proclivity to sell off on rallies, as we have most certainly turned very bearish of the last several days. I think the 0.8 level underneath is massive resistance. Longer-term, I think we will go to the lower levels of the longer-term consolidation at the 0.6 level. If we can break down below that level, then I think the market goes down to the 0.83 level after that.

I believe that there is a natural proclivity for the market to go towards the United Kingdom as the Bank of England has made it clear that there should probably be some type of interest rate over the next year. On the other hand, the European Union is nowhere near interest rate hikes, and they are more than likely going to continue bond purchases. That of course is very negative for the currency, and beyond that situation we have a lot of concerns when it comes to Italy. The Italian bond market is something to be concerned about, and now there’s even talk about Portugal giving way. Over the longer run, I believe there is more than likely we are going to continue to drift to the downside. I believe that rallies offer nice opportunity to pick up the British pound on the cheap.