Bye bye 1.10 EUR/USD. That level was broken on Friday quicker than Usain Bolt can run 100 metres. With the US NFP (Non-Farm Payroll) figure coming in much better than consensus it was a dollar strength move.

Where now for EUR/USD? The next psychological resistance level is 1.08 to the downside then we’ll be aiming for the September 2003 low of 1.0762. I’d expect this to be broken in the coming weeks if not this week. The trend is for EUR/USD to move lower so I wouldn’t want to stand in its way. Parity? Hmm, I’m not sure. I suggested we’d trade around 1.07 end of year and I’ll maintain that 12 month forecast. We may have a go at parity but I would think we’d bounce off any number around 1.02.

Has the Euro got considerably weaker in the past two months? Evidently looking at where we are trading at. However, I don’t think the fundamentals have changed too much in the Eurozone or got in any worse of a state. Yes, the Greek situation is a disaster and we’ll bumble along for another 3 months or so until the summer then we’ll see where we are then. Is this any different to what the Eurozone has been doing for the past 5 years? I’d suggest this is the ‘new normal’ and we’ll probably have some EUR pullback in the summer months.

Is GBP/EUR too high? Yep, I’d suggest so. The climb has been quite extraordinary since January. Would I bet on it not going to 1.40 now? Nope. I think we’ll have a go at 1.40 and then it’ll pull back below. With UK elections in under 2 months and MP’s with their rare ability to say something inept at the most unsuitable of times coupled with the perceived political instability/unknown that will likely ensue, Sterling will weaken prior to the summer. If you are a EUR buyer then of course I would look at these levels to secure some of your exposure on a Spot basis or a Forward Contract. Think we’ll go to 1.40? Please email me and we’ll place a market order for you.

GBP/USD? We’ll be under 1.50 again soon. I don’t see much upside on Cable and we’re likely to target 1.45. If you are a USD buyer I would suggest looking at securing some of your USD before the rate falls further. USD seller? Look at converting some of your USD into GBP at these levels. If it was to bounce up to 1.54 or so again you would kick yourself that you didn’t secure GBP on this move lower. I’d suggest converting some of your USD on Spot and then I do think GBP/USD will go lower still although as I always say, doing nothing is speculating. Please contact me to discuss your options.

If you have any questions please do let me know.

Have a great week

Written by Liam Alexander