EUR/USD
The EUR/USD pair rallied during the Friday session but gave back all the gains to form a shooting star. I believe that the market is going to continue to show negative pressure, but the weekly candle was a hammer. Because of that, I believe that we are going to see a lot of choppiness in the near-term, as we reach towards the 1.05 level. Remember, bond traders are starting to bet against Europe in general again, and that will only fuel the fire for the downside. A lot of concerns about the French election continues to persist against the Euro, and a breakdown below the 1.05 level should send this market much lower. I continue to sell rallies as they show signs of exhaustion.
GBP/USD
The British pound had a negative session on Friday, as the area above 1.25 continues to be resistive. However, I think that there is a significant amount of support below the 1.24 level so I believe that this is simply going to continue to consolidate with the 1.25 level being the fulcrum. Ultimately, this is a market that should continue to see a lot of noise, but I think given enough time we will eventually see the buyers win. The 1.27 level above continues to be resistive, and we can break above there I believe that the British pound continues to go much higher.
Alternately, if we can break down below the 1.2250 level, the market will then be free to go to the 1.20 level. I don’t think that it’s going to happen, but it’s possible considering how much volatility that we have seen. I believe that the British pound is trying to form a longer-term bottom, and we are simply going to roll of the growing pains of a longer-term trend change.
