Euro and Pound Weekly Update - March 18 close

EURUSD

The Euro-Dollar almost reached last week’s target level, and it would seem there is a strong enough momentum to break the weekly highs and attain the 161.8% Fibonacci extension. On Daily we can see this pair broke its previous highs, and will probably reach 138.2% extension at 1.4250; second target level would be the round number at 1.4300.

If the resistance at the weekly highs holds, we might have a pull back and retest of the break at 1.4030 or even the weekly SMA200 at 1.3970/80 but the tone of this pair is still very bullish and might continue its ascension for a good while.

GBPUSD

The Pound-Dollar ended last Friday at our previous week’s first target and is really close to reach the highs at around 1.6340/50. I would favor a break and extension to at least 100 pips higher, at the 127% Fibonacci level (1.6440) which will also be near the upper trend line of the daily ascending channel. A longer term view would bring us above the 138.2% extension at 1.6660/70 with 1.6666 as strong magnetic psychological level, which will probably be near the weekly SMA200 at that time.

EURGBP

The Euro-Pound failed to correct to the downside despite the shooting star candle pattern on weekly charts, and kept climbing to reach the upper trend line of the symmetrical triangle. I still see a correction to the 0.8530/40 level (38.2% Fibonacci retracement on previous swing high, and confluence of the SMA34 and middle line of the weekly Bollinger bands) before a break of the triangle and continuation towards last quarter of 2010 highs at 0.8925 on a longer term view. On the Daily charts I would favor a pull back to the ascending trend line at around 0.8660/50 and another leg up to reach the 138.2% extension on the swing high, at 0.8770 before the above mentioned longer correction sets in.