EUR/USD
The Euro rallied significantly during the trading session on Friday, reaching towards the 1.14 level. This is an area that began significant resistance though, not only extending to the 1.15 handle, but also with the 50 EMA sitting in that area, it makes sense that there would be a lot of selling pressure. I think on signs of exhaustion, it’s an opportunity to start selling again. The 1.15 level above is massive resistance, and even though the Euro has rallied so nicely on Friday, the reality is that we are in a downtrend, and it’s only a matter of time before we roll over. If we did break above the 1.15 handle, then I think we could start to see some bullish pressure. At this juncture, I believe that the Euro continues to suffer at the hands of the greenback, and part of what we are seeing on this chart might be a bit of short covering ahead of the weekend.
GBP/USD
The British pound rallied during the trading session on Friday but found enough resistance to give back some of the gains. The 1.27 level underneath is massive support, so if we were to break down below that level, then I think the market probably goes much lower, and based upon the triangle that I have marked on the chart, we could be looking at a move down to the 1.22 handle after that. The 200 day moving average is at the top of the descending triangle, so I would be surprised to see us break out of the triangle. Ultimately, signs of exhaustion will be nice selling opportunities and I think that the market will continue to agree that being the case. Overall, this is a market that continues to be hammered based upon Brexit headlines.
