DXY traded 95 pips last week, 136 in the prior week, and 186 pips three weeks ago. D XY’s 1400 pip drop from 114.00’s over the past four months was pretty easy as DXY traded above 50-year monthly averages. Corrections higher were shallow as averages materialized every 100 pips above the current price.
DXY is no different today as it was four months ago. Averages are positioned every 100 pips from 102.00s to 109.00s and 109.00s to 114.00s. A partial explanation to a 95 pip trade week was DXY now approaches 99.97 and 98.89, then 96.00s and 95.00’s. The overall bottom from the current analysis is located at 92.00’s.
On the opposite side is EUR/USD and rising averages. The January 12 lineup is 1.0457 to 1.0847 or 390 pips Vs. Today 1.0596 – 1.0898 at 302 pips. While EUR/USD bottom side averages at 1.0500’s won’t break anytime soon, EUR/USD top averages gain no traction to propel EUR/USD higher. DXY must move lower for EUR/USD prices and averages to travel higher.
As bottom-side averages became deeply overbought, EUR/USD failed to hold the range from 1.0800s to 1.1100s. EUR/USD at its current 1.0596 trades perfectly neutral.
EUR/USD Targets
Above 1.0898 targets 1.0942 and 1.0968 and are easily achievable. Next, EUR/USD targets are at 1.0995, 1.1038, and 1.1077. EUR/USD at 1.0995 becomes overbought and adoption to a short-only strategy. EUR/USD bottom at 1.0829 holds first support, then 1.0705. The overall target reported in December at 1.1001 holds. December lows held at 1.0300s.
Driving markets is DXY trading lower by 100 pip increments to EUR/USD’s rise by 100 pips. D XY’s failure to continue lower than EUR/USD could easily consolidate in a 1.0596 to 1.0898 -1.0900 range. D XY’s break at 99.00 and 98.00, then EUR/USD automatically travels much higher, and topside averages continue to climb higher.
The Week
The commonality to EUR/USD, AUD/USD, NZD/USD and GBP/USD is bottom side averages rose significantly over the past month while topside average remained stable.
USD/JPY trades 125.04 to 133.68 or an 864 pip range. The previous range was located from 125.00’s to 135.00’s. Or 1000 pips. USD/JPY continues a slow grind lower as it follows DXY’s descent. D XY’s break at 99.00;s and 98.00’s, then lower for USD/JPY to challenge 125.00;s. USD/JPY opens the week's oversold and short opportunities.
GBP/USD trades from 1.2114 to 1.2578 or 464 pips. Dec. 22, GBP/USD traded from 1.1988 to 1.2542 and 1.2551 or 554 pips. GBP/USD trades overbought from 1.2114 and reveals 1.2500’s remain elusive to a break anytime soon. Short highs are the best strategy.
JPY Cross Pairs
JPY cross pairs trade oversold to match oversold USD/JPY. EUR/JPY 135.00 ‘s to 141.47. GBP/JPY 156.30 to 161.47, CAD/JPY 95.11 to 99.16, GBP/JPY 156.30 to 161.77.
AUD/JPY at 92.00’s trades far too high, especially about counterpart JPY cross pairs. Look for a break at 91.79 for shorts and a lower price.
AUD/USD and NZD/USD: AUD/USD 0.6874, 0.6992, 0.7138 and 0.7196. NZD/USD trades overbought within the current range at 0.6316 to 0.6638.
USD/CAD and Cross Pairs: USD/CAD contains serious range problems. Higher must break 1.3394. GBP/CAD trades 1.6224 to 1.6700s and 1.6800s.
AUD/CAD trades massive overbought and targets 0.9389
EUR/CAD trades the exact same as last month. EUR/CAD middle 1.4400;s decides EUR/CAD 1.4200’s or 1.4600’s and 1.4700’s.
GBP/AUD Vs EUR/AUD: GBP/AUD trades severely overbought. Trade strategy remains long to target easily 1.7503. Many rounds of shorts exist all week. EUR/AUD long this week matches longs to GBP/AUD.
EUR Vs. EM
EUR/HUF and EUR/RON in the EM space trade are profoundly oversold and a long opportunity. Remainder EUR vs. EM trades dead neutral.