Euro continues to grind sideways against British pound

The Euro has been relatively quiet against the British pound over the last several sessions, which makes quite a bit of sense as we are essentially taking a break from a lot of the drama when it comes to all things Brexit related. With that being the case, it makes quite a bit of sense that we are sitting on top of a large, round, psychologically significant figure in the form of the 0.86 handle. Furthermore, it appears that the 0.86 level is support that extends down to the 0.85 handle, something that is going to be even more psychologically important.

At this point, it most certainly has been negative as of late but as the Brexit situation continues to cause major issues, and much of the selloff has been in congruence with the overall short covering when it comes to the British pound around the market. The market does in fact look very likely to test this area significantly, but we are more likely to find a balance rather than a breakdown. Having said that, if the market does break down below the 0.85 handle, that is something that you must pay attention to as it would be a large, round, psychologically significant barrier getting busted. At that point, the market would very likely go looking towards the next large figure, the 0.84 handle. Otherwise, if we were to bounce there is a cluster at the 0.88 level that has caused quite a bit of reaction in the past, and of course the 200 day EMA is floating around that area will attract quite a bit of attention. All things being equal though, exhaustive and choppy conditions will more than likely persist, but we are sitting at such a major support region that short-term balance certainly seems to be the more likely scenario.