EUR/USD
The EUR/USD pair has rallied on Thursday, as we await the jobs number. I believe that people are jockeying ahead of the experience to play the breakout that would happen at the 1.21 handle. I believe that the 1.20 level underneath continues to be supportive, as it was a gap from a couple of sessions ago. Beyond that, it is a large, round, psychologically significant number, and that of course will attract a lot of attention. We had recently broken out of a bullish flag on the weekly chart, and it should signal that the market is ready to go much higher. In fact, the flag measures for a move to the 1.32 handle, but obviously that is down the road. I like buying dips, if we can stay above the 1.19 handle below which I think is the bottom of a large “zone of support” that starts at the 1.20 level.
GBP/USD
The British pound rallied a bit during the day as well, but in a much calmer manner. I think that the market is going to try to continue to go higher, but recognize that the 1.3650 level above is the scene of a significant gap lower, so it is going to take a certain amount of momentum to break above. I think short-term pullbacks are buying opportunities, as the market has been such a massive move to the upside, and it looks likely that the 1.3333 handle underneath should continue to be the “floor” in the market. I think that the uptrend line underneath continues to drive the market higher as well, so it’s almost like a beach ball being held underwater, eventually once we break the level above, it could explode rapidly higher.
