EUR/USD
The EUR/USD pair initially tried to rally during the day on Wednesday, but found the 1.09 level to be too resistive. We turned around to form a shooting star, and now I think that we are going to continue to go lower, filling the gap from the previous week. That should send this market down to the 1.0750 level, where we could find a bit of support. I think that the market will continue to be volatile, but quite frankly I feel that the buyers could return and that area. I think that this market will continue to be very choppy, as there are a lot of headlines coming out of the European Union. The fact that we gave back the gap immediately after the French election would have been the first sign of trouble.
GBP/USD
The British pound try to break above the 1.2950 level again during the day on Wednesday but turned around to form a shooting star. There is an uptrend line just below, so having said that it looks as if the markets may find buyers at lower levels. Short-term, I feel that the market will continue to be volatile, and I do favor the upside longer-term, but I think that we will get a little bit of a pullback. The 1.2750 level underneath should be supportive as well, so it’s not until we break down below there that I would consider selling. I think that the buyers will continue to return to this market, and eventually we will break above the 1.30 level. However, we have the Bank of England interest rate announcement coming out during the day, and more importantly, the meeting minutes. If they sound hawkish at all, that should send the British pound much higher. The meantime, expect quite a bit of choppiness without any real direction until that announcement comes out.
