EUR/USD
The EUR/USD pair rose during the Friday session after we had less than stellar US economic announcements come out. I see a significant amount of resistance of the 1.10 level above, but when you look at the longer-term chart, it seems as if we are stuck in a range between 1.05 on the bottom and 1.15 on the top. This has been the case for 2 and half years now, so the fact that we are in the middle of that range tells me that we should expect a bit of volatility. If we can break above the 1.10 level, I believe that the market will then go to the 1.13 level next, followed by the 1.15 handle. Alternately, if we break down below the 1.0850 level, the market will probably try to fill the gap in go down to the 1.0750 level after that. Beyond there, we would probably make a return trip to the 1.05 level.
GBP/USD
The British pound initially fell during the day on Friday but found support near the 1.2850 level again, just as we had on Thursday. This means that the market should continue to find buyers on dips, and I believe we are trying to break above the significant 1.3 handle. Once we do, the market has the freedom to go to the 1.3450 level, which was the top of a major consolidation area some time ago. I believe that the 1.2750 level underneath continues to be the “floor” of this consolidation area, and if we can stay above there, I remain bullish of this pair, at least for the short term. This being the case, I am a buyer unless we break down below that 1.2750 level. If we do, then things change drastically. Until then, I have no interest in trying to fight the recent break out.
