EUR/USD
The Euro rallied significantly during the trading session on Friday, but then turned around to form a massive shooting star. The Euro has been struggling as you know, and Friday with the strong jobs number, the US dollar gained almost immediately afterwards. The candle stick suggests that perhaps there is more downside to go, and I think it is only a matter time before the Euro revisits the lows again. I believe the 1.13 level will be rather supportive, but not much has changed fundamentally between the Euro and the US dollar, so it makes sense that we would fall from here. The alternate scenario is that we break above the 1.15 level, but it doesn’t seem very likely to happen in the short term.
GBP/USD
The British pound initially tried to rally during the day on Friday but found resistance above the 1.30 level, an area that of course makes a lot of sense as we had formed a shooting star like candle and of course beyond that is a large, round, psychologically significant figure. At this point, I think that the market has gotten a bit overbought at this point, so it makes sense that we would continue to see a bearish pressure as the Brexit is still on the minds of the British pound traders. If we can break above the top of the last couple of candles, then we could start reaching towards the 1.3150 level. As long as there is uncertainty about the Brexit, it makes sense that the British pound will fail to continue to lift from here. Higher interest rates in the United States of course make the US dollar attractive as well.
