Euro falls against Sterling during choppy Tuesday session

The EUR/GBP pair continues to be very noisy, as we dance around the 0.88 handle. This is a market that has a lot of support just below, but quite frankly there are a lot of crosswinds when it comes to this pair as we are still reacting to headlines coming out of any type of negotiation, and of course both economies are showing less than stellar economic numbers. This is essentially a heavyweight fight between a couple of lightweights, meaning that it’s a matter of whose worse, or maybe another way to look at it is that who’s “less worse?”

Ultimately, if we break down below the 0.8750 level, the market probably drops down to the 0.87 level after that. Alternately, if we break above the highs from the session on Monday, it’s likely that we go to the 0.8850 level above, which is significant resistance. If we can break above there, then I think that the market probably goes to the 0.89 level which has been important in the past. I think we continue to consolidate overall though, as we have done for several sessions. I would be very cautious about putting too much money into the market, as we will have sudden outbursts of volatility based upon random headlines coming from random people. The 0.86 level underneath should be a major support level, and a breakdown below there could unwind this pair completely. However, we are light years away from doing that.