AUD/USD remains the last holdout currency to achieve its target from long-term averages. AUD/USD broke through at the 5 and 10-year averages from 0.7298 and 0.7934 targets 0.6881 and 0.6853. The market awaits resolution to AUD/USD as NZD/USD, EUR/USD, GBP/USD all broke long term averages and achieved targets.
EUR/USD, GBP/USD, and NZD/USD Deeply Oversold
All JPY currencies all trade safely above longer term averages as well as USD/CHF, CHF/JPY and USD/JPY. EUR/CAD, GBP/CAD, NZD/CAD and AUD/CAD trade safely below. GBP/AUD trades safely below while EUR/AUD trades below with strong resistance just above current price.
AUD/USD's main conundrum is it lacks correlations to its cross pairs. AUD/USD Vs AUD/CHF correlates at -41%, Vs AUD/JPY at -41%, Vs AUD/NZD at -62%. Most vital to AUD/USD and to stop AUD/USD’s further slide is the +95 correlation to AUD/CAD.
AUD/CAD is the top pair in the AUD universe at a 0.9060 exchange rate and 2000 pips from AUD/USD. The opposite pair to AUD/NZD is AUD/CAD, which explains AUD/CAD’s top position to AUD/USD. Both AUD/CAD and AUD/NZD are the exact same currencies, separated by two different exchange rates. Plus, AUD/CAD is traditionally a dead mover currency and contains every ability to stop AUD/USD's downside.
Generally, by years dated to the 1960s, AUD/CAD trades roughly 700 ish pips per year. For 2022 and 5 months, AUD/CAD traded 600 pips, 1000 for 2021, and 800 for 2020. AUD/CAD for the current year trades within its historic range.
AUD/CAD is deeply oversold and matches oversold AUD/USD. AUD/JPY and AUD/NZD trade deeply overbought while AUD/CHF is fairly neutral short and long term and trades by meandering alongside AUD. AUD/USD’s closest pair in the currency pair line up as the middle currency is GBP/USD, then the bottom pair NZD/USD. EUR/USD fits into the AUD/CAD universe by a +44% correlation to AUD/CAD.
The Bloomberg survey forecasts EUR/USD to parity and 0.9700;s. EUR/USD was introduced at 0.9800’s in 1998 and traded above USD/CHF, AUD/CAD, and DXY for its 24-year existence. For EUR/USD to trade at parity, it must cross below DXY.
USD/CHF and AUD/CAD would be forced to drop to act as bottom supports. 50-day averages are driving the vast majority of our currency pairs. AUD/USD’s 50-day is located at 0.7365. Once AUD/USD bottoms, it contains a long way to travel higher.