EUR/USD
The Euro initially tried to rally on Friday but then rolled over to show signs of negativity. The 1.15 level underneath is very supportive, as we have recently formed a hammer, and then rally significantly. The question now is whether or not we will find support again at the 1.15 level. And I think that if we do, it’s likely that we would turn around and continue to consolidate between that level in the 1.18 handle above. In general, this is a market that is erratic, as there are a lot of concerns around the world when it comes to various issues, and I think the Italian debt issue continues to weigh upon the Euro as well. Looking at this chart, I anticipate that we probably will see buyers on dips, but it’s not going to be an easy move. If we break down below the hammer from earlier this week, then we probably unwind down to the 1.13 level.
GBP/USD
The British pound got hammered during the session as we reached towards the 1.3250 level, forming a short-term “double top.” I think we will probably see a bit of a pullback from here, but I also anticipate that the 1.30 level underneath should be supportive. Because of this, I think we may see another couple of days of negative action, followed by value hunting yet again. We have broken out previously, as evident by the 1.30 level being underneath, and of course the downtrend line. Ultimately, I think that we do break out to the upside as soon as we get some type of settled negotiation between the EU and the UK, but until then we are going to see a lot of noise in this pair. I look at these pullbacks as value opportunities.
