EUR/USD
The Euro broke down rather significantly during the trading session on Wednesday, as we have finally busted through major support. At this point, it looks as if the Euro is going to continue to drift much lower and we are going to see a lot of US dollar strength. In general, the 1.12 level above should be significant resistance now, and it’s not until we break above the 1.1225 level that I would consider going in the other direction. Ultimately, it looks as if we could go down to the 1.11 handle, and then eventually the 1.10 region. The US dollar continues to strengthen against many other currencies around the world so don’t be surprised if the greenback becomes “King dollar” again. Rallies at this point look very likely to be selling opportunities in this market and this break is much more significant than it looks at first blush.
GBP/USD
The British pound continues to fall out of bed, as we are approaching the 1.29 level after breaking through significant support in the form of the descending triangle bottom. Now that we have done that it suggests that we could be going as low as 1.25 or so, which would also retest the previous downtrend line. Overall, I think rallies will be faded and I have no interest in trying to pick up this market quite yet. There are plenty of reasons to think that the British pound will continue to lose strength, if nothing else because we see a lot of US dollar strength, and then of course the fact that the Brexit is delayed, but we still have no idea how that’s going to work out. Overall, this is a market that should drift lower.
