EUR/USD
The EUR/USD pair fell towards the 1.16 level during the day on Wednesday, but then turned around to form a bit of a hammer. I believe that the market is trying to form a bit of a bottom right now, but we are currently in a consolidation area, with the 1.15 level underneath offering major support. The 1.1850 level above is significant resistance, extending to the 1.20 level. I think that we will be going sideways for the near-term, but I think that the downward pressure is starting to abate finally, and I believe that the 1.15 level is going to continue to offer a “floor” in the market. If we were to break down below there, it would be extraordinarily negative. I suspect that buying on dips to pick up a bit of value is probably how most traders are going to approach this market.
GBP/USD
The British pound fell during the trading session during the day as well, reaching towards the 1.30 level. This is an area that of course will offer a lot of support, as it is a psychologically and structurally important level. I anticipate that it is only a matter of time before the buyers return, but if we were to break down below the 1.30 level, there is now a gap that I would be focusing on that is closer to the 1.29 handle. Either way, I think that we have seen the worst of downward pressure, and I think that longer-term traders are starting to come in and pick up a bit of value now that things look so bearish and of course we are approaching such major levels. If we did break down below the 1.29 level, I believe the 1.28 level opens the door to the 1.25 handle.