EUR/USD
The EUR/USD pair rallied during the day, bouncing off the 1.06 level and showing significant strength. A lot of this was due to Donald Trump suggesting that the US dollar was far too strong, and at the end of the day that sent the US dollar lower against most currencies around the world. Ultimately, if we can break above the 1.07 level, the market should go to the 1.0750 level next. Alternately, if we find some type of exhaustive candle near the 1.07 level, we may be able to turn around and reach towards the 1.06 handle. Expect a lot of volatility going forward, as the pair has seen quite a bit of headline disruption in both directions.
GBP/USD
The British pound rallied during the day as well, as the comments of the president worked against the US dollar. The British pound had already been rallying a bit during the day, but now we are starting to make serious gains. If we can break above the 1.2650 level, I think that the market can continue to go much higher. And exhaustive candle between here and there could be a selling opportunity as we would continue to consolidate in the blue box that I have on the chart.
There are inflationary pressures on the British pound and the British economy at the moment, so I think that the British pound will go higher. Ultimately, this is a market that should show quite a bit of volatility over the next several sessions but we are a bit overextended in the short term. I would anticipate that sellers will come back out into the market, but I also recognize that markets can remain irrational much longer than you anticipate. With this, I expect fireworks in this pair relatively soon, now that the president has chimed in with his opinion.
