EUR/USD
The EUR/USD pair initially broke out during the course of the day on Thursday, but struggled above the 1.14 level. That being the case, we ended up forming a shooting star which was preceded by a hammer. However, comments out of Janet Yellen in front of the U.S. Congress during the day suggested that the Federal Reserve is far from raising interest rates again, which takes a bit of the legs out of the US dollar in general. With that in mind, I believe that the Euro will continue to strengthen against the US dollar and eventually challenge the 1.15 level where we would have a major breakout.
Pullbacks at this point in time should find plenty of support below, and I believe that the “floor” in this market is somewhere near the 1.1050 level. We will have to wait to see whether or not the European Central Bank decides to fire back in the currency war, but at this point in time it looks like Miss Yellen has the upper hand.
GBP/USD
The British pound initially fell during the course of the day, testing the 1.44 level but again with the Congressional testimony taken center stage, the Pound ended up rallying against the US dollar as all currencies did. Truthfully though, there is a lot of noise between the 1.46 level and the 1.44 level below, so at this point in time I do not necessarily like trading this market. It’s not that there is in a trade, it’s just ultra-short-term type of trading.
If we can break down below the 1.44 level, I think that there is enough support to keep this market above the 1.40 level in the meantime. Because of this, I actually prefer to trade the EUR/GBP pair if you need to be involved in the British pound for any reason. Currently though, I still think that the EUR/USD pair is going to be the easiest trade of the 3.
