Levels, ranges and targets as titled is fully descriptive in my estimation to encompass the comprehensiveness to currency and all market prices based on my many years inside assorted models, trades and views. The range aspect as it pertains to EUR/USD, USD/JPY and USD/CAD to describe February to current day highlights based on actual pip movements.
EUR/USD since Feb dropped roughly 600 pips from 1.2500’s to 1.1900’s while USD/JPY rose 600 pips since Feb from 104.70 to 109’s and now 110’s. EUR/USD wasn’t ready to break the 10 year average at then 1.2800’s and dropped while USD/JPY failed to break the 14 year average at 103’s and subsequently rose.
The end result after 3 months was a slow grind 600 pip range trade and reported week after week to the EUR topside drop and JPY rise. The compression story remains into week 11 however extremely slow as a EUR/USD topside drop and JPY rise continues to eventual showdown in the weeks ahead.
The sincere miss to EUR/USD shorts was the 1.2300 break as it allowed a clear 400 pip move to 1.1900’s. USD/JPY on its own volition began its severe confliction in the 107’s and 108’s as it became an uncertain currency pair in search of its next move. It traded to 110’s only on a break of 107’s and 108’s as it cleared the 106 clutters and the move higher was forced upon USD/JPY. The only clear move in the 600 pip rise was caught for 200 ish pips at the 104 bottoms to 106’s.
To CAD’s 600 pips, remember the March 14th CAD trade and the 600 pip drop in USD/CAD from 1.3100’s to 1.2500’s. This trade was done in weeks as well as CAD/JPY. Both USD/CAD and risk measure CAD/JPY remained severely stuck after the drop in barely 200 – 300 pip ranges. Both pairs remains stuck today, 9 weeks later.
The commonality to currency markets in the last 3 weeks and into today was cross pairs became settled in 100 to 150 ranges while as written the next move had to derive from the USD and non USD pairs. The Carney comments forced the move yet the Carney statements were unforeseen.
Known prior was the move was coming while not known was the origination. A currency price viewed as an economic document and leading indicator contained 2 choices to force the USD V Non move and those distinctions were a misaligned economic announcement or central bank statement.
EUR/USD is now deeply oversold as prior overbought in the 1.1200’s, 1.1300’s and 1.1500’s eliminated as written on the drop to 1.1900’s. Massive oversold supports exist in the 1.1700’s 1.1800’s and 1.1944 at the 5 year average.
Higher EUR/USD targets 1.2033 on a break of 1.1998 and 1.2015. EUR/USD will severely struggle at 1.2079, 1.2082 and 1.2085 as it approaches its vital break point to travel higher at 1.2142. A massive cluster of resistance surrounds 1.2142 at 1.2147 and 1.2163. Only on clearance to this area would EUR/USD target 1.2251. Until the cluster clears, higher EUR is viewed as a correction.
USD/JPY higher must clear 110.01, 5 year average at 110.04 then comes 110.45, 110.53 and 111.05. Higher to 110’s must clear 109.13, 109.25, 109.43 and 109.94. Watch 109.94 for reversal. USD/JPY rises comes slowly and painfully as the absolute top is located at 113’s.
USD/JPY as seen in USD/CAD contains miles of downside but USD/JPY is held by the Fed’s promise to raise Fed Funds into an already skyrocket overbought Fed Funds rate.
Lower USD/JPY must break 108.85 to target 107.79, 107.75 and 107.14. Good longs at 107.14 to target 107.75.
GBP/USD overall range is wide and located from 1.3308 to 1.3901. Longs are the way this week to target 1.3637, 1.3701 then rough points at 1.3766 and 1.3777. The overall break point for higher is located at 1.3810 but in the way is 1.3855. Overall, GBP is oversold and has every ability to fly much higher to target 1.4200’s in the weeks ahead.
AUD/USD remains deeply oversold and far more oversold from the last report. In AUD, the deeper downside is viewed as a fantasy. At 0.7100’s represents severe extremes at 0.7400’s is done and below 0.7566 is untouchable. AUD contains great potential to travel much higher to 0.7700’s.
Longs this week targets 0.7577 and 0.7596 on the way to AUD’s overall break point at 0.7676 and 0.7695.
GBP/JPY deeply oversold targets easily 149.59 and on the way to its break point at 150.29. Longs only is the only strategy.
AUD/JPY remains as well highly oversold and the break point is located at 83.57.
USD/CHF as well is heading for a deep correction to first 0.9880 then 0.9809. Higher must break 1.0129 to target 1.0195. USD/CHF in the 0.9700’s is well protected by many and massive supports. Seen as well in USD/CHF is a highly conflicted currency pair.
USD/CAD closed this week at 1.2845 and last week 1.2830. The range is located from overbought 1.2754 to 1.2982 and 1.3038 for an overall 284 pip range.
USD/CAD since March 14th continues its barely 300 pip range. The only approach is sell price rises as further overbought begins at 1.2865 and 1.2891. Overall, miles of downside exists to USD/CAD especially 1.2500’s on a break of 1.2754. Look for a move lower to 1.2830 then 1.2792.
NZD/USD remains not a thrilling currency pair. Overall break point for higher is 0.7147 and a move higher is expected and targets 0.7069 and 0.7079. Above 0.7147 targets 0.7184.
Overall USD is heading for corrections and non-USD higher to solve overbought and oversold conditions rather than any type of trend.
Pertinent to USD this week is first Secured Overnight Funding Rate 1 month and 3 month Futures contracts are set to begin trading Monday May 7.
SOFR was introduced as a substitute/ replacement to Libor and first launched April 3rd at 1.80 and since dropped to 1.70 against Friday’s close at 1.74.
Fed Funds on the other side closed at 1.70 in 9 of the past 10 days. The overall effects to USD so far is irrelevant, so far.
Brian Twomey