My focus today will be on EUR/USD and GBP/USD, and the best way to monitor those rates of the key European currencies against the dollar is to watch the EUR/GBP rate.

As the chart below shows, the range constriction over the last 20 hours or so suggests that a major breakout lies ahead.




EUR/USD is coming down towards a retest of the $1.2520 level seen May 6. The key question is whether this testing will hold setting up a tradable double bottom or whether there will be an eventual failure and move down towards my intermediate term target of $1.18. The technical performance in coming hours will be revealing.



$GBPUSD looks vulnerable to a retest of the $1.45 level seen last week.

As I mentioned earlier from my Twitter account, sterling appears to be getting ready to be the fly in the ointment which could overshadow all of the happy, clappy pictures emanating from Number 10 Downing Street yesterday.



Clive Corcoran is the publisher of TradeWithForm.com, which provides daily analysis and commentary on the US stock market.