British pound breaking support
The British pound broke down significantly during the trading session on Tuesday, slicing through the 1.3650 level. That’s also an area of interest due to the uptrend line there as well. Now that we have broken down below there, if we stay below that area it is a major cell signal. This market could go to the 1.35 level initially, perhaps even lower than that. Alternately, if we turn around and close above the uptrend line on the daily chart, that shows that the market is still trying to keep itself above water. However, as a record this looks like the sellers are probably going to win the day.
On a move higher, the 1.40 level would of course be a target. As 60 right now though, I think we are much more likely to see this market go to the 1.35 level and beyond. I recognize that the treasury markets are influencing the US dollar more than anything else, so pay attention to the 10-year note. If rates continue to rise there, I think that will continue to put bullish pressure on the US dollar. However, if we get some type of relief in the interest rate front, then this market will probably turn back around. I believe the volatility will be an issue, but we are most certainly making a serious decision for the next several months in this area.