EUR/USD
The EUR/USD pair fell initially during the day on Wednesday, but found enough support at the 50-day exponential moving average to turn around and form a hammer. However, given enough time I think we are going to have to make some type of decision. Today could be that day, because we get the ECB Interest Rate Statement coming out during the day, and more importantly the accompanying press conference. At this point, I would suspect that the market is trying to get to the 1.0750 level but I would expect quite a bit of resistance there. And exhaustive candle could be a selling opportunity in that range, but if we get a daily close above there I think the market will continue to go higher. Alternately, if we close below the 50-day exponential moving average, I am a seller and believe that the market will reach to the 1.05 level underneath.
GBP/USD
The British pound fell on Wednesday, as we continue to see quite a bit of resistance just below the 1.25 handle. Because of this, I think the market will drop from here, and perhaps reach towards the 1.20 level given enough time. If we can break down below the bottom of the range for the Wednesday session, I would be a seller. Alternately, if we can break above the 1.25 handle, then the British pound could continue to go higher. I believe that the reaction to the Theresa May speech was a bit overdone, so unless we can get above the 1.25 handle on a daily close, I would be very cautious about going long. Don’t get me wrong, this is a very strong green candle that the market had formed during the Tuesday session, so it’s not to be easy to sell this market. If we do break above the 1.25 handle though, that would essentially make this market a market forming a “W” which of course is a very bullish sign.
