EUR/USD
During the session on Wednesday, the EUR/USD pair initially fell to try to find support at the 1.1050 level, found it, and then turn right back around to break out to the upside. This was helped by the fact that the Federal Reserve has finally cut down forecast for interest-rate hikes going forward. While at one point there was a suggestion that we would have four interest-rate hikes by the end of year, the Federal Reserve now looks at two as being the likely number. This is much softer than originally anticipated, so it makes sense that the US dollar would lose quite a bit of strength against the Euro. With this, I believe that this pair continues to go higher and that we are going to reach towards the 1.13 level, and then eventually the 1.15 level after that.
GBP/USD
The British pound initially fell during the day on Wednesday, but found enough support above the 1.40 level to turn things around. This makes a lot of sense though, because quite frankly the 1.40 level has been historically significant, and of course it is a large, round, psychologically significant number on top of that. Because of this, the market looks like it is ready to continue going higher and should probably reach towards the 1.45 level. This was exacerbated by the above-mentioned Federal Reserve statement during the day, and at this point we have to start to wonder whether or not the US dollar has been a bit overvalued recently.
With this being the case, we think that short-term this pair will continue to go higher, but the question then will remain whether or not the United Kingdom is going to stay in the European Union or not. If they don’t, that will weaken the British pound and as long as the decision seems to be fairly unclear, there’s going to be a bit of a black cloud overhanging this market.
