EUR/USD
The Euro broke down again during trading on Wednesday, as we are pressing the 1.13 level. It looks as if we will break through this area, and that short-term rallies are to be sold. If that’s going to be the case then I think we probably reach towards the 1.12 handle. The US dollar strength seems to be somewhat relentless, and any signs of fear will continue to drive this pair down. Beyond that, we also have concerns about political instability in the European Union as Angela Merkel has been forced to step down. I think that it’s only a matter time before we get some type of short-term rally, but that should be a selling opportunity unless of course we were to somehow break above the 1.15 handle, something that doesn’t look very likely to happen in the short term. I still favor selling rallies.
GBP/USD
The British pound rallied quite nicely based upon another false twitter induced rally but gave back quite a bit of the gains once we broke above the 1.28 level. The market continues to press the 1.27 level underneath, and I think that the market will probably break down there eventually. If we break down below the level, then I think the market probably reaches towards 1.25 handle. Unless we get some type of good news involving the Brexit, I don’t see how the British pound sustains a rally for any length of time. Granted, we are oversold but that’s no reason to start buying. It’s simply a reason to start selling on rallies as we cannot sustain any positive momentum for any significant amount of time.
