EUR/USD
The Euro initially tried to rally a bit during the trading session on Friday, but then broke down rather significantly. By doing so, and perhaps even more importantly closing at the bottom of the candle stick, this changes a lot. We had initially tried to form a bit of a “W pattern”, and although that hasn’t been completely negated, clearly there has been a shot across the bow of the buyers. Having said that, I still think there is massive support extending all the way down to at least the 1.11 handle.
A lot of this is going to come down to what the Federal Reserve does and what it says, because if it continues to be a bit more dovish, it’s only a matter time before this market rallies. However, if we were to break down below the 1.11 handle, then we are going to be looking at a potential move down to the huge level of 1.10. At this point it’s not a huge surprise, because quite frankly this pair tends to chop around anyway.
GBP/USD
The British pound sold off late in the day as we are reaching towards extreme lows. I still think there are buying opportunities underneath, so therefore if we can see some type of bounce, it’s likely that buyers will come in to try to drive this market towards 1.28 handle. If we can break above there, then we have a shot to reach the 1.30 level. Underneath, I believe that there are a lot of buyers just waiting to jump into this market near the 1.25 handle. If we break down below that level, things could get truly ugly but I think we are getting closer to the bottom than ever before as the Brexit and noise is probably still priced in.
