EUR/USD
The EUR/USD pair exploded to the upside on Friday as we continue to see the US dollar get pummeled. We reach the 1.12 handle, which of course is a large, round, psychologically significant number and an area that the market has reacted to in the past. Because of this, pullback should continue to offer buying opportunities just as a break above the top of the range for the Friday session should. There is a lot of noise above and we have gotten a little ahead of ourselves, so I do prefer buying on the dips as it offers value. Because of that, I think that the “floor” in the market is closer to the 1.10 level, and would love to buy this pair somewhere between here and there. However, if we do breakout to the upside it just shows that there is another leg higher coming.
GBP/USD
The British pound rallied on Friday, breaking above the 1.30 level again. Because of this, the market looks as if it is trying to continue the uptrend that we have seen, and perhaps reach the 1.3450 level over the longer term. The previous uptrend line has held for several days in a row, and we are obviously starting to see bullish pressure. The US dollar continues to get sold off in general, so it makes sense that we will continue to see buyers in this market. Short-term pullbacks are buying opportunities, and I have no interest in selling at this point. I believe that the 1.3450 level above will be the target longer term, so it’s not until we break to that area that I think that the market will change its attitude again. I do recognize that there’s a lot of resistance in that area, so it may take some time to get above it. In the meantime, I believe that the uptrend line just below will continue to support.
