EUR/USD
The Euro initially fell during trading on Wednesday but turned around to show resiliency yet again. However, most of the American banks weren’t monitoring the markets, as the Americans were memorializing President Bush, so there would have been a bit of a liquidity loss in North America. Because of this, I would read too much into the hammer other than it is more of the same action that we have seen over the last several days. At this point, I don’t see any interest in trying to pick up a lot of momentum in this market right now, I think we are just simply going to go back and forth in 50 pips intervals at best.
GBP/USD
The British pound initially tried to rally during the trading session on Wednesday but gave back quite a bit of the gains at the 1.28 level to show signs of weakness yet again. I believe that if we can break down below the lows of the Tuesday session, this market will unwind, perhaps going all the way down to the 1.22 handle. It is probably only a matter of time before the British pound breaks down, as Parliament continues to debate the entire deal structure of the Brexit. There is a lot of noise right now, and quite frankly Twitter can set the currency markets on fire with all the algorithmic traders currently. The one trade that has worked for several weeks has been wait for some type of positive spike in the British pound based upon a rumor a headline, and then simply fade that rally. I do believe that eventually we break down and go much lower.
