EUR/USD Technical View
Euro recovered in the last week of 2007 and got above 1.4700 where the pair traded in the past few days, and formed a hammer candle on the weekly chart(as seen below). While we are trading below Friday’s high at 1.4830 we maintain our bearish bias on this pair and expect a move lower aiming at first for the 1.4600 area as an intermediary target before the 1.4300 December low. EurUsd is trading in an overbought area close to a strong resistance level on the daily chart and this is one of the facts that makes us think the pair is going to go lower. Conversely a move above Friday’s high will certainly be a blow to shorts and perhaps shift focus towards the psychological target of 1.5000, a target we failed to reach in November.
GbpUsd Technical View
GbpUsd broke the upsloping channel it has traded in for most of last year and after a timid retest of the 2.0100 area we have seen the pair move sharply lower in the first days of 2008 reaching the support line at 1.9670 which is August 17th swing low. Price action in the week in front of us will have to confirm either the bearish trend or the 1.9670 strong support; we think the pair is going lower although a small bounce from the support is not to be ruled out. Next major bearish target is the 1.9550 area, if cable gets there it will certainly open up the road towards the 1.9100 support. The next few days will be crucial to how the pair will continue to perform for the rest of the month, looking at the former years we can see that January has been an important month, a time where either the low or high of the trading year was established.