EUR/USD
The EUR/USD pair fell during the course of the day on Thursday, testing the 1.1050 support level. We did find enough buyers in that area to turn things back around and form a hammer though, so having said that it looks like we are going to bounce. A bounce from here could very well see this market reaching towards the 1.13 level given enough time, and then possibly even higher than that. I feel that although both central banks are trying to work against the value of their own currencies, it more than likely will favor the Federal Reserve as nobody can devalue its own currency like the Americans.
As long as we stay above the 1.10 level, I am essentially a “buy only” type of trader. Delaware would start selling this market as if we see some type of break down below the 1.10 handle, which of course would have me thinking that the market should then go to the 1.08 level.
GBP/USD
The GBP/USD pair tried to rally during the day on Thursday as well, but turned back around to form a somewhat exhaustive candle. By doing so, it looks as if the market is ready to continue drifting lower. At this point in time, the market will more than likely continue to go lower every time we rally, as I just don’t see the argument for a higher rate. After all, the US dollar is a bit of a safety currency, and the British pound just simply cannot get out of its own way. With this, I believe that short-term rallies will continue to offer short-term selling opportunities but that’s about all you can expect out of this market.
See quite a bit of support below, but I do think that we grind our way down to the 1.41 level given enough time. We could go below there, but I would anticipate that the 1.40 level is massively supportive.
