EUR/USD
The EUR/USD pair has fallen a bit during the day on Wednesday, as we continue to look at negativity in the market. The US dollar has been rallying for several days now, and breaking down below the neckline of a head and shoulders is of course a very negative sign. The move measures for the EUR/USD pair to go looking towards the 1.13 level underneath, where I think that buyers may return, because not only is it the measured move, but it is also the 50% Fibonacci retracement level. If we were to break down below that level, there is a gap near the 1.08 level that could be filled, but that is obviously a much longer term. Overall, I believe that the market will continue to be bumpy, but a bit negative going forward as the ECB has turned dovish.
GBP/USD
The British pound initially tried to rally during the day on Wednesday, but rolled over to find the 1.3325 level far too resistive. We now have broken below the 1.3250 level again, and I think the market should continue to be volatile and choppy in the meantime. I think that the 1.3050 level underneath should be supportive, so I think this is a simple pullback. Not only do we have the horizontal support, but we also have the uptrend line just below, so I think that the market will eventually find buyers and break out to the upside. The 1.3650 level above is the target, and I think that the market is trying to get to that area over the longer term. Remember, this is where the market gapped lower after the surprise about to leave the European Union, so I think it’s far too interesting for traders to ignore.
