EUR/USD
The EUR/USD pair rallied during the day on Wednesday, as we continue to see a lot of noise in this market. The 1.08 level above is resistive, so this of course could cause some issues. I think we break above there, the next serious area of resistance of the 1.0850 level above, so I think that it is only a matter time before the sellers get involved. An exhaustive candle above should be a nice selling opportunity as it would continue the longer-term downtrend. A breakdown would continue to favor the US dollar obviously, so that makes sense as the ECB is likely to increase its quantitative easing while the Federal Reserve continues to look likely to raise interest rates several times.
GBP/USD
The British pound fell on Wednesday, as we are starting to see a significant amount of “pushback” at the 50% Fibonacci retracement level. I also recognize that the 1.25 level below is very important, and of course we have the previous uptrend line that could come into play as well. So, what I think is that we need to go back and forth from time to time, but eventually we will get sellers that interest this market as the longer-term downtrend has been so ensconced. A break down below the 1.25 level since this market much lower, and I think it happens given enough time. Even if we rally from here I recognize of the 1.2850 level above is massively resistive as it was previously so supportive. In fact, I feel that’s the “ceiling” in this market. Because of this, I am only looking for selling opportunities, and as a result I think that either exhaustion or further bearish pressure is well need to see in order to continue to buy the US dollar. After all, the US dollar has been the strongest currency in the world.
