EUR/USD
The EUR fell rather rapidly during the day on Wednesday as the Federal Reserve announced yet another rate hike. However, what’s more important is that it seems as if the Federal Reserve is going to have several rate hikes, while the ECB has recently just extended quantitative easing. Because of this, I believe that the EUR will continue to fall over all, and I am looking to sell. As we rolled into Thursday, the pair did a break below the 1.05 handle. At this point in time, I believe this only short-term rallies will be the way to go as the EUR continues to soften. I have no interest in buying this pair, and at this point I still expect to see parity before it’s all said and done.
GBP/USD
The British pound fell as well after initially tried to rally on Wednesday and in part for the same reason. The Federal Reserve looks to be the only hockey central-bank out there, and it now appears that the US dollar will continue to strengthen longer term. As we rolled into the Thursday session we started to test the 1.25 handle. If we can break below there I feel that the market probably reaches toward 1.23, and that eventually the 1.20 level after that. I believe that this market continues to go much lower over the longer term, and that we could very easily find ourselves breaking down below the 1.20 handle some time in the next few months. If we do, we then have the 1.15 level below that has been massively supportive on the longer-term charts. At this point, I believe that rallies offer selling opportunities on signs of exhaustion as the “ceiling” is near the 1.2850 level when it comes to this market. While I believe that the British pound has been oversold for a while, this recent balance has made it much more attractive to short.
