EUR/USD
The EUR/USD pair fell again on Friday as we continue to reach towards the 1.05 level. This is an area that I think will be supportive yet again, but once we break through there, the market could break down significantly. Because of this, I am waiting to see whether or not we can close below the 1.05 level on the daily chart before shorting. If we rally from here, I believe it’s only a matter of time before the sellers get involved and I would be very interested in selling on the first signs of exhaustion. The European Central Bank extending quantitative easing another 9 months of course is been a work against the value of the Euro, and I feel it’s only a matter of time before we reach towards parity.
GBP/USD
The British pound went back and forth on Friday, showing a very neutral candle by the end of the day. There is a significant amount of support just below though, so I think it can be difficult to continue the downward momentum in the short-term. However, if we break down below the 1.25 handle, I think that the British pound will start working its way back towards the 1.20 level below. Given enough time, I do think that happens but we may have to bounce before building up enough momentum to fall below. If we do, I don’t see any reason why we can’t continue to see bearish pressure after that.
Even if we rally from here, I think the 1.27 level above will continue to be resistive, and most certainly the 1.2850 level above there will be, as it was so massively supportive in the past. With this, I remain bearish of the British pound, but realize that timing is going to be everything.
