EUR/USD
The EUR/USD pair went back and forth during the day on Friday, as we tested the 1.06 level. The volume of course would have been very light on Friday, but Thursday was a very negative day and we essentially wiped out all the gains from Wednesday. The reaction on Wednesday was predicated upon president Donald Trump suggesting that the value of the US dollar being too high, so the markets got a bit ahead of themselves. The 1.06 level is supported just below, but we have broken down below it before and I think that it’s only a matter of time before we reach towards the 1.05 level. The support level at the 1.05 level is much more significant as far as I can tell, so I think there we will see more of a fight.
GBP/USD
The British pound rallied on Friday, but of course it is a very low-volume day. We have recently seen a lot of bullish pressure in this market, but I also recognize that the 1.26 level above is rather resistive. If we can break above there, the market will more than likely will find the 1.27 level above being important as well. If we break above that level, I think it becomes more of a ‘buy and hold’ type of market.
In the meantime, I suspect that we will probably see some type of resistance just above, and a continuation of the overall consolidation that we have seen. I believe that the British pound will break out eventually, due to the fact that we have a significant amount of inflationary pressure and the British economy. The British pound of course will benefit from the possibility of rate hikes, but currently I think that the market is still trying to build up the momentum to go higher.
