EUR/USD
The EUR/USD pair rallied initially during the session on Friday but has found the 1.20 level to be a bit too resistive yet again. Because of this, looks like the market is ready to pull back, and I believe that the 1.20 level will continue to offer significant resistance. Because of this, we may need to drop to lower pricing to bring in more buyers. I suspect that this correction could last several sessions, so I anticipate that this market may be a bit soft. However, I think that eventually we do breakout to the upside. I see support at the 1.1850 level, the 1.1750 level, and of course the 1.15 level which I think is essentially the “floor” in this market.
GBP/USD
The British pound fell during the session on Friday, especially towards the end of the day in American trading as it was reported that there was a downgrade of British creditworthiness. However, I think that we are bit overextended anyway, so it makes sense to pull back from here. The market has certainly gotten ahead of itself, so I think that we could see the British pound drive down to about 1.33 underneath, which although would be negative, in a longer-term sense it is merely a blip on the radar. Also, the 1.3650 level is the scene of a massive gap from the surprise vote on leaving the European Union. If we did break above that level, it sends us into the next “buy-and-hold” phase of cable. I believe there is plenty of support below, and that we may have to go lower to try to find it. I believe that we are about to see the US dollar pick up a little bit of strength over the next several sessions.
