Friday’s Forex Trading Setups: Will the EURUSD Spike Hold?

EURUSD

The EURUSD is higher on an agreement among EU leaders at its Economic Summit to allow repayment obligations of bank bailout funds to be junior to existing sovereign debt.  As such, the EURUSD is currently trading around 1.2600.  However, as seen by previous spikes higher in the EURUSD after EU related headlines that faded quickly, the pair could be vulnerable again today.  As such, before getting too excited about today’s EURUSD strength, Forex traders should watch where the EURUSD ends up today and opens next week.   If the pair falls back into its previous downward channel (see chart) it would reveal that Forex traders remain skeptical towards the pair and would be vulnerable to further weakness next week.  On the other hand, it the EURUSD manages to close the week above 1.2600 and holds onto its current strength, this would be a bullish signal for the pair.  Such a scenario would bode well for continued upside next week.

Support/Resistance 1.2570/1.2628

GBPUSD

Trading higher today as it reverses all of yesterday’s losses.  Looking ahead, the key for the pair will be to stay above its previous 1.5645 resistance.  After initially failing at that level, it has cleared it and looks ready to test 1.5700 again.  The big worry though is that the pair hit a new low for the week yesterday, showing Forex traders may not be willing to stay to commitied to this pair and could be ready to sell quickly if today’s BoE Reports are negative.
Support/Resistance 1.5640/1.5700