EUR/USD
The Euro initially tried to rally during the day on Friday but found a little bit of resistance just below the 1.08 handle, which has been resistance previously. Because of this, we could pullbacks slightly and because of this I think short-term traders may try to go to the downside. Ultimately though, I believe that the candle from the Wednesday session should offer quite a bit of support. If that’s the case, I think that the buyers will return. This is going to be a very choppy currency pair over the next couple of sessions, but if we can break above the 1.08 handle, the market should be free to test the 1.09 level next.
GBP/USD
The British pound initially fell on Friday but continued to grind higher as we reached towards the 1.24 handle. There is a significant amount of resistance between here and the 1.26 level, so I think it’s only matter time before the sellers return. I’m waiting to see whether we can get an exhaustive candle to start shorting, as I believe that trying to go long at this point would be very difficult. There will be a lot of noise between here and there, so I believe that the longer-term downtrend will probably reassert itself given enough time.
Article 50 should be triggered soon, and that of course will cause a bit of a washout when it comes to British pound traders, but given enough time that should be the absolute bottom. I believe that this market has a massive floor down near the 1.20 level, and that we will struggled a breakdown below there without that announcement. Even if we broke down below there I think there is an even stronger case for support at the 1.15 level based upon long term charts.
