We had an all week buying of both Euro and Pound until finally on friday, dollar bulls showed some strength, after 2 weeks!! Now the question remains, if it was just a “last day of the month” correction, after closing orders from the whole month or a first reversal sign. We will find out very soon. To me, both EU and GU are due for a correction. Statistically august is the 2nd worst month of the year for the pound(may is the worst), 9 out of 10 times, it goes down. I expect it to correct towards 2800, at least. Since EURGBP looks very bearish now, EU should drop more than GU, when dollar goes up. So for EU I would look for 1500-1550 as the first big stop…and if 1500 breaks, 1300 is my final target for now. UCHF is EU reversed, so same applies to it, as seen on the charts below. August might be a slow month compared to july, with less volatility, so not expecting anything as crazy as we have seen in july. And in september, markets should slowly go back to normal, with banks and other big players coming back “from vacation”.
Even if I am right with the above, there should still be a retrace upwards on monday, EU should go towards 1820 and GU towards 3130, at least. Doesn’t have to…but if you are into shorts, better to wait through asian session and wait for better short entries during Frankfurt or London.