EUR/USD V USD/CAD: 7 V 24 Hour

The 7 Vs 24 hour trade is a trade within a trade and for day trades only. Trust this point. The 4 hour chart doesn’t work, won’t work and its impossible to maximize the full profit potential. Over past months, deep research focus is 7 Vs 24. Instead of 24 hours, trades can factor to seconds and minutes. A 4 hour chart covers 240 minutes. The primo time to trade according to the ECB and the new 2016 interest rate rules is 7 and 24 hours. I don’t make the rules but instead follow the ECB dictates.

Current question. Can I factor the 24 hour trades easier and only for 24 as factoring 10 and 12 daily trades is a time monster. At what point may a 24 hour trade clash with a weekly vital level. While we trade a price, the gamble is to trade a market price to market price. Many traders do this and maybe they are right or maybe wrong. If wrong, most traders don’t know how to repair and profit from what appears to be a loss. A loss requires a doubling of profits to reach breakeven in the account.

USD/CAD yesterday full weekly 1.3379, 1.3419, 1.3500, 1.3581, 1.3662. Today: 1.3390, 1.3431, 1.3514, 1.3597, 1.3680.

USD/CAD is no different from all currencies as range points currently affect day trades. Currently is the key word. Normal weeks. range points distance is never this close. The 7 and 24 hour trades within 2 larger levels. A normal week is seen for example as 1.3379 to 1.3581 or a larger distance.

Yesterday’s 7 hour top 1.3493 and 24 hour 1.3521 Vs bottoms 1.3357 and 1.3365. The trade was normal for normal price movements. Any price over 1.3493 and 1.3521 was in extreme to overbought. Then USD/CAD traded to 1.3644 in an extraordinary move.

We had 1.3500, 1.3581, 1.3662. The smart approach is to take 1.3521 to its full conclusion to understand our levels and price location.

Next 1.3552, 1.3560, 1.3568. Every 8 pips to full conclusion is 1.3677. Seen from USD/CAD yesterday isn’t just a rare event but an event not seen since the 2016 changes. Prior to 2016, USD/CAD traded yesterday’s price range a gazillion times and more on rare days.

The only answer to yesterday’s move was add 1 lot and add anywhere as overbought was at extremes above 1.3493 and 1.3521.

USD/CAD Today

USD/CAD

 Long Short Line 1.3557

 Most Important 1.3523 and 1.3543 Vs 1.3565, 1.3574, 1.3582, 1.3591, 1.3608, 1.3617, 1.3626

Bottom 1.3488 achieves by 1.3505 and 1.3523

Upper target 1.3626

Continuation Fail 1.3591

USD/CAD today traded lows at 1.3521. Isn’t that interesting but also at breakeven plus profit on add 1 lot.

Today 7 hour bottom 1.3488 and 24 = 1.3383. Vs 1.3626 and 1.3668.

Known to USD/CAD automatic is overbought and short is the only strategy.

Brian Twomey

EUR/USD Validation

Information for the sake of information. My friend tells me currency analysts began working for currency brokers and later somehow picked as currency analysts. I see this as interest for increased salary and benefits and failure to learn about markets and price movements. Obviously an understudy fails to exist at these currency brokers and client profits remain luck strokes. Analysts today speak at universities for $300 per hour. The Daily Fx crook who stole my trades and commentary spoke at Duke University law school.

Que sera sera as they say in Barcelona as 70% traders remain losers. Charts, entry = profits remains the only game in town and this began the downfall. The computer allowed the poison to spread.

Set up below serves for any financial instrument on the planet.

EUR/USD 52

 Long Short Line 1.0369 

 Most Important 1.0329 and 1.0360 Vs 1.0375, 1.0382, 1.0388, 1.0395, 1.0408, 1.0414, 1.0421

Bottom 1.0317 achieves by 1.0330 and 1.0343

Upper target 1.0421

Continuation Fail 1.0395

Proof: 1.0317,1.0343,1.0395,1.0421 = 1.0369.

7 numbers for upside prices is required for balance. Factored from interest rates and counted in your head or your fingers. 3 bottom numbers is required for bottom balance. The shorter the time frame traded then the more numbers are required.

The 24 hour trades requires 6 numbers but I offer every number to target in the price series. EUR/USD yesterday was a 200 pip profit trade and done by 6 numbers.

Balance is seen by math as proof to the numbers in the series are perfect and correct.

Balance is also seen in the concept as what is done at the top is also done at the bottom.

Today USD/CAD serves as a perfect example

USD/CAD 68

 Long Short Line 1.3425

Most Important 1.3373 and 1.3413 Vs  1.3433, 1.3442, 1.3450, 1.3459, 1.3476, 1.3484, 1.3493

Bottom 1.3357 achieves by 1.3374 and 1.3391

Upper target 1.3493

Continuation Fail 1.3459

See top 1.3459 = 1.3357 bottom. Bottom 1.3374 = 1.3476 top. Bottom 1.3391 = 1.3493 top.

The daily range number decides if a 1 to 2 pip discrepancy exists in a price series as seen by USD/CAD. Tomorrow’s USD/CAD may or may not trade perfectly or against a 1 to 2 pip discrepancy.

GBP/JPY lives daily with a 2 pip discrepancy.

We’re not dealing with rocket science yet lacking today is understanding. Markets weren’t designed for complication but designed to be able to trade and profit successfully.

If I showed the deeper interest rate part to today’s commentary, all would say OH, I see, I now understand. But this won’t happen. Better to maintain a man as honest than to allow a crook access as happened to my friend Peter years ago.

Brian Twomey

FX Weekly: Gaps and Trade Opportunities

DXY big breaks this week are located at 106.30, 106.65, 106.79, then 108.30, 108.46, 109.26, 109.42. DXY lows target 105.18 and 105.09. DXY 106.79 becomes most vital as 107.00’s fail to register this week. DXY last week 107.81 rose to 108.30.


The DXY information is not only accurate but DXY levels serves to trade every weekly market price on the planet from stocks, commodities, interest rates and any currency. Nothing more is required and we may submit as is.


Economic announcements are located inside the price. Don’t surmise what is the level of GDP or NFP when the actual number is located within DXY. Possibly GDP or NFP is located from DXY 106.30 to 106.79 or maybe 105.18 to 106.30. Fed Funds 12 and 25 point daily movements maybe found within the same DXY levels.


The obvious GDP route is enter the 108 numbers for perfect accuracy and 300 numbers or 25 years for NFP averages as NFP was first introduced in February 1939.. Normally 20 and 25 years serves as an accurate NFP forecast to include actual and off sync. The statistical agencies in charge to factor and release economic data forecast anywhere from 3 months to barely 1 and 2 year averages. NFP requires a minimum of 5 years data or 60 months.


EUR/USD


As DXY opposite, EUR/USD levels are located from 1.0351, 1.0316, 1.0271, 1.0235. 1.0199 and 1.0056. EUR/USD trades overbought and a short only strategy for the week to target 1.0253. Last week’s target at 1.0215 traded to 1.0354 lows from 1.0446. This week is a continuation short from last week.
EUR/USD traded 226 pips last week Vs DXY 245. This week is expected 170 to 184.


GAP Opportunities


Last week Gap opens occurred in AUD/NZD long, AUD/CAD and NZD/CAD short. This week Gap opens include short GBP/CAD, EUR/CAD, AUD/CAD, NZD/CAD. Further opportunities include long CAD/JPY, CAD/CHF, USD/CHF.


Problem pair USD/CAD traded 179 pips last week Vs 375 for GBP/USD. USD/CAD as problem currency lacks ability to trade 1/2 GBP/USD and underperforms to EUR/USD and DXY.


GBP


This week’s stars are short overbought GBP/USD, GBP/CAD, GBP/AUD and cautious short to GBP/JPY while no thrills exist to GBP/NZD and GBP/CHF. EUR/NZD is the best currency rather than GBP/NZD.
Overbought GBP/AUD will assist EUR/AUD lower. Watch EUR/AUD 1.5278.


JPY Cross Pairs


Overbought to GBP/JPY and NZD/JPY while oversold to CAD/JPY and CHF/JPY. EUR/JPY and AUD/JPY at fairly neutral will follow the crowd. Overbought GBP/JPY as leader should assist JPY cross pairs lower on a short only strategy for the week.


USD/JPY weekly levels: 137.81, 139.25, 139.97, 140.69. USD/JPY 140.69 should match to DXY 108.30 and 108.46 and EUR/USD 1.0235.


SPX 500 traded 101 points last week or just shy of 1/2 DXY. Low target this week is located at 3918.


Overall, an average trade week.

Brian Twomey

FX Next Week and Yield Curve Inversions

Since the Fed’s last raise November 3, Fed Funds rate opens and closes at 3.83. The Fed Funds rate once traded freely on its own with highs and lows as any financial instrument. In 2000, Central banks implemented meetings every 6 weeks. Prior to 2000, central banks met anytime they desired and changed interest rates at their own discretion.


Traders were forced to factor Fed Funds for oversold and overbought status for possible changes to an unknown date to meetings. Fed Funds then was known as the discount rate and this rate is discounted to headline. The question was the spread and insight to possible interest changes.


Bernanke and Big Sis Yellen changed Fed Funds into an immovable fixed rate. Fed Funds moves every 12 points with every 25 point change to headline and remains fixed.


From 3.83, Fed Funds trades daily at its maximum 25 points and minimum 12 from 3.80 to 4.05. Yields are priced from Fed Funds and normally trade much higher rates.


The question to past yield curve inversions occurs particularly when higher yields trade below lower yields especially the 10 to 2 rates. How serious is an inversion must be measured by the 10 year to 3 month to determine where was Fed Funds location in relation to inversions. Avoidance of recession in 6 months on a 10 to 2 inversion might nullify recessions by money supply adjustment.


Due to Fed Funds at Fixed rates, speculation to inversions under a completely different system as existed in past years happens when yields trade below Fed Funds rather than the old definition of 10 to 2 year crossovers and imminent economic danger.


Under the new speculation to inversions, the 30, 10 and 7 year yields meet the criteria to inversions as Yields trade below Fed Funds by 11, 15 and 3 points at 3.72, 3.68 and 3.80.


Further, interest on reserves or IOR trade 3.90, SOFR 3.80 and 3.76 for Tri Party and Broad collateral rates.
Fed Minutes released yesterday revealed Treasury Markets were functioning normally.


The overall assumption is yesterday’s inversions and recession no longer applies as the criteria pertains to a systemic condition that no longer exists.


The Week


Best trades for next week are short to severely overbought EUR/CAD, GBP/CAD, AUD/CAD and NZD/CAD. All are subject to Gap openings on Sunday night.


Next is deeply overbought EUR/USD, GBP/USD and NZD/USD.


AUD/USD is excluded as it imposes a different set of circumstances than EUR, GBP and NZD/USD.
When AUD/USD traded 0.6500’s and 0.6600’s, AUD/EUR also traded in lock step to AUD/USD at 0.6500’s and 0.6600’s. This marriage left EUR/AUD paralyzed to movements over months.

AUD/EUR now trades 0.6480 or EUR/AUD 1.5413 and AUD/USD at 0.6700’s. AUD/USD lower must break 0.6673 and AUD/EUR 0.6552 or EUR/AUD 1.5262. AUD/USD and AUD/EUR remain in a tight relationship.


EUR/AUD or AUD/USD requires a wider range movement to break the AUD/USD and AUD/EUR relationship and force a better trade for both currencies. Until this happens, AUD/USD and EUR/AUD will suffer to total range movements and reduced profits.


Overbought EUR, GBP and NZD/USD is the direct result of DXY. Last week big lines above were loacted at 107.81 and 108.34 and DXY traded to 108.01. DXY above averages now exist at 106.81, 108.27 and 108.42 and 109.29. DXY averages above are dropping slowly as weeks progress.


DXY traded 232 pips this week Vs EUR/USD at 226. DXY targets 105.05 this week and another 200 pip range week.


USD/CAD as a result of DXY averages, faces many and massive lines at 1.3400’s and 1.3500’s on a short only strategy. USD/CAD first major line is located 1.3329. USD/CAD averages above are dropping slowly every week along with DXY.


USD/JPY last week 139.44 to 140.29 or 141.15 and 142.01. Highs traded to 142.24 and lows at 138.02 on the break ay 139.44.


USD/JPY this week: 137.76, 139.29 and 140.05. Above 140.81 then higher for USD/JPY. Overall, USD/JPY will follow DXY lower.


EUR/NZD long for next week anywhere at 1.6500’s. AUD/NZD trades massive oversold while GBP/NZD also heads long but least favored. EUR/NZD is the best of the 3 currencies.


GBP/JPY and NZD/JPY trade overbought while EUR/JPY waits for a resolution at 143.29 and oversold to AUD/JPY and deeply oversold CAD/JPY. JPY cross pairs lack uniformity.

Brian Twomey

EUR/USD V USD/EUR

EURUSD Topside: 1.0340, 1.0347, 1.0353, 1.0360, `1.0373, 1.0379, 1.0386,


EURUSD Bottom 1.0282, 1.0288, 1.0295, 1.0308, 1.0323.


EURUSD Topside as USD/EUR = 0.9671, 0.9664, 0.9659, 0.9652, 0.9640, 0.9634, 0.9628. As EUR/USD rises, USD/EUR falls.


EUR/USD Bottom as USD/EUR = 0.9687, 0.9701, 0.9713, 0.9720, 0.9725. As EUR/USD drops, USD/EUR rises.


USD/EUR topside: 0.9682, 0.9688, 0.9700, 0.9706, 0.9712, 0.9718, 0.9725.


USD/EUR topside as EUR/USD = 1.0328, 1.0309, 1.0302, 1.0296, 1.0290, 1.0282. As USD/EUR rises, EUR/USD drops.


USD/EUR bottom: 0.9627, 0.9633, 0.9639, 0.9651, 0.9667


USD/EUR Bottom as EUR/USD = 1.0344, 1.0361, 1.0374, 1.0380, 1.0387, , As USD/EUR drops, EUR/USD rises.


Every financial instrument currency, stock, commodity, whatever contains an equal opposite to assure ranges are tightly bounded, derived from interest rates and shown, proven by math perfect. Markets trade perfectly as scientific financial instruments and again proven by math.


Slight discrepancy between USD/EUR and EUR/USD levels. EUR/USD deals today with 52 while USD/EUR 49. Broken down to lowest common denominator, EUR/USD perfect at 6 pips and USD/EUR at 6.5 to explain slight difference at 0.5.


From academic research papers years ago, today’s number 6 is called bounce patterns. USD/EUR and EUR/USD trades in 6 pip intervals which means every pip break must reside within the interval before the price moves again. The why is explained by EUR/USD and USD/EUR levels.


Note for example EUR/USD 1.0308 Vs USD/EUR 1.0309 or 0.9700. EUR/USD 1.0295 vs USD/EUR 1.0296 or 0.9712.


EUR/USD trades in a constant battle with USD/EUR as each side to movements is responsible for each other. Pips truly matter as every traded pip holds important commentary to the next traded price.


While this all may look simple and easily explainable, the upside and downside price are 2 completely separate animals. Downside prices must factor completely different from upside levels to capture opposite levels to the financial instrument.


SPX for example is viewed as 4003.58 but its also 0.0002497. Easier to view and trade SPX as 0.0002497 as only 5 points and 5 levels must convert to cover tops and bottoms.

Brian Twomey

FX Weekly: Gap Opens, EUR V DXY, JPY, AUD, GBP

A Gap applies to a Sunday night open when the currency pair is severely overbought or oversold. The amount of pip movements depends on the degree of overbought or oversold. The purpose to the Gap open is to allow a currency price to begin the week in neutrality and to permit the currency pair to align to its counterpart currencies. A weekly trade holds the same principles as a daily trade as the price begins in neutrality and holds a fair chance to rise or fall.


Gap risk. No such concept exists to risk. Gap risk is opportunity for free money. The following currencies from 28 are subject to Gap opens: Short GBP/CAD, EUR/CAD, NZD/CAD, NZD/JPY, GBP/AUD. Long AUD/NZD.


AUD/CAD barely meets the requirements to overbought as does its massive overbought counterparts but because AUD/CAD resides in the same family, AUD/CAD will follow short to its family members yet not for the same amount of pip movements.


USD/CAD fits into the equation by deeply oversold as USD/CAD sits on its big break point at 1.3328 to target lower at 1.3236. The relationship to USD/CAD and cross pairs is CAD = CAD. The current period to market trading is the 2nd side to the currency pairs drives and moves in unison. Examples include CHF/JPY = USD/JPY, EUR/GBP = GBP/USD.

A currency pair is an equal opposite yet tilted to one side based on the period to market trading. The foundation is EUR/USD / DXY.


Prior to 2008, the 1st currency drove and was responsible for all movements. The 2 sides and places seen is by Math as Correlations and bounded residual plots to Simple Regression. When the 2nd side to currency pairs drive markets, ranges are suppressed and wider under the first currency pair side. Seen most specifically to EUR/USD and USD/JPY.


DXY V EUR/USD


The target last week at 105.05 traded to 105.34. DXY traded directly to target and never looked back and actually traded from oversold to more oversold. EUR/USD traded the opposite path from starting the week at overbought to trade higher overbought to 1.0481.


DXY this week 107.81, 108.34 then the brick wall at many averages at 109.00’s and 110.00’s. DXY is supported at 106.30 and 105.67. The weekly range is about 200 pips.


EUR/USD is well supported at 1.0157 and 1.0186 Vs 1.0376 or 190 pips. EUR/USD target this week is 1.0215 and up from 1.0136 from last week. EUR/USD traded lows to 1.0272. By trading to overbought 1.0481, EUR/USD averages rose and DXY averages remain on the slow, slow downslope.


Currency markets this week are defined as 200 pips then add 50 – 100 pips for cross pairs and the week is established.


DXY from 106.67 and 114 pips = 107.81. EUR/USD at 1.0322 to 1.0376 = 54 pips. DXY from 106.67 and 105.67 = 100 pips. EUR/USD from 1.0322 to 1.0186 = 136 pips.


EUR/USD last week traded 211 pips and 189 for DXY. At 200 pips for this week, currency markets are tight and defined by compression of averages. Either markets breakout and offer wider trade ranges or 200 defines markets for a long time into the future.


EUR/USD close Friday is expected at 1.0254.


Trade Rank


EUR/USD, EUR/JPY, EUR/CAD, NZD/JPY, NZD/USD, EUR/AUD, AUD/USD, CAD/JPY, AUD/JPY, USD/CAD, USD/JPY, AUD/CHF, CAD/CHF, NZD/CHF, EUR/NZD.


Best trades: : EUR/USD, EUR/JPY, EUR/CAD, NZD/JPY, NZD/USD, EUR/AUD, EUR/NZD


GBP Best: GBP/CAD, GBP/AUD, GBP/USD, GBP/JPY, GBP/CHF


Easiest trades first for maximum pips then next set of easiest trades followed by trades of no interest or trades that require much figuring and factoring.


AUD/USD sits as least favored as 0.6659 decides AUD plus AUD just doesn’t have a clue which way to travel and the same applies to AUD/JPY and AUD/CHF. NZD/USD is the better trade.


USD/JPY 139.44 to 140.29 or 141.15 and 142.01. Least favored USD/JPY but we have 5 days of day trades to guarantee profits.


GBP/JPY begins the week overbought and its shorts for JPY cross pairs. AUD/JPY is least favored while GBP/JPY, EUR/JPY and CAD/JPY remain preferred.


GBP shorts favored all week.


Due to DXY short ranges, SPX and stock markets will suffer from small moves this week. SPX traded 127 pips last week and much the same is expected this week.


XAU/USD will follow EUR/USD lower and target 1744.


Overall, another range week and the same as last week.

Brian Twomey

EUR/USD Day Trade: Same as Yesterday

Yesterday’s EUR/USD is the exact same day trade as today and an extremely rare event. Not one number to EUR/USD changes. Yesterday’s EUR/USD bottom at 1.0321 broke to 1.0305 then traded 60 pips higher to 1.0365. Break bottom or top is free money granted by our central bank interest rate curves. Add extra lots to trades upon breaks at bottoms and tops.


Interest rate curves is what’s traded every day as central banks transposed interest rates to exchange rates and exchange rates to interest rates. Both are the exact same but shown in 2 separate numbers.
Yield curve trades for much longer terms from 300 to 1000 ish pip targets.

Yield and interest rate are two separate stories and two completely different numbers. Never both numbers will ever meet as both are separate financial instruments traded freely everyday.


A deeper explanation and many trade examples viewed in many different ways are located at btwomey.com.


Day trade duration is 2;30 to 10:00 am and imposed by central banks, specifically the ECB. A 10 am end time doesn’t mean hold webinars at 8 and 9 am as nothing is left to trade. The best trades for profit already passed.


Today is Friday and especially weird for central banks to offer the exact same trade as Friday is the day for prices to head to the close to set up for next week’s weekly trades. But this is where the 24 hour trade comes into full focus or the day trade within a day trade.


All week we dealt with EUR/USD traded in deep overbought while DXY from 105.05 target traded to 105.34 and remained deeply oversold all week.


EUR/USD as the exact same trade means GBP/USD is also the exact same trade as yesterday. The difference between EUR/USD and GBP/USD is the name and exchange rate number but both share the exact same trade operation. Both go up and both go down for the same amount of pips.


What changed since yesterday was AUD/USD, NZD/USD, USD/JPY, EUR/JPY, GBP/JPY and slightly to USD/CAD.


1.0321,1.0334,1.0347,1.0328,1.0362,1.0407


Vs 1.0380,1.0387,1.0393,1.0400,1.0413,1.0420,1.0427.

Brian Twomey

EUR/USD V DXY Day Trade Breakdown

Today’s EUR/USD: 1.0321,1.0334,1.0347,1.0328,1.0362,1.0407


Vs 1.0380,1.0387,1.0393,1.0400,1.0413,1.0420,1.0427.


This 7 hour day trade must contain a price path from 12 to 14 numbers. This is mandatory because the full balance of prices must be known as to low, high or just right. Just right is almost impossible to achieve. Today’s EUR/USD is to high which means shorts are favored.


The 7 hour trade must contain all numbers because EUR/USD trades its best movements within the 2:30 am to 10:00 am est time frame. The longer the time frame traded then the less price path numbers required. The 24 hour trade for example required about 4 to 6 numbers total.


Vital numbers today are 16, 35 and 53 which means EUR/USD has free reign to trade 16 pips then struggle at the 35 and 53 points.


EUR/USD on the bottom is perfect between 1.0338 and 1.0347. Below 1.0338, EUR/USD becomes oversold and longs favored.


EURUSD topside is perfect from 1.0406 to 1.0413. Above 1.0413 becomes overbought and shorts are favored.


If a target is offered then the 2 points would be 1.0406 to 1.0413 and 1.0338 to 1.0347.


DXY


105.80,105.987,105.93,106.07,106.22 Vs


106.40,106.47,106.54,106.61,106.67,106.74,106.81,106.88.


EUR/USD and DXY from each price path are in a massive struggle to trade high and low. Its a Russian standoff and the result maybe small moves until settlement. A severely off balance news announcement may settle the balance.


DXY vitals are 54, 34, 14 Vs EURUSD 53, 35, 16. DXY free reign at 14 Vs EUR/USD at 16.


DXY is perfect from 106.07 to 106.22 and 106.67 to 106.74. Above 106.74, shorts are favored and below 106.07 then longs favored.


DXY refers to all USD currencies as USD/JPY, USD/CAD and all EM.


DXY Vs EUR.USD


106.07 to 106.22 = EUR/USD 1.0406 to 1.0413. DXY 106.67 to 106.74 = EUR/USD 1.0338 to 1.0413.

Brian Twomey

FX Weekly: Trade Ranges, EUR, DXY, GBP, JPY

From 2018 to April 2021 when Inflation printed 3.00’s, weekly trading ranges traded 150 ish pip weeks and cross pairs at 150 to 200 ish pips. As higher Inflation and interest rate changes became the norm, trading ranges expanded to current 150 X 3 or 450 to 500 pips.


Yet the current 450 – 500 pip weeks failed to match the 600 and 650 pip weeks from 2008 to 2010 as a result of the market crash then to price normalization. The 600 equates to 150 X 4. The current 450 to 500 exceeds weekly trade ranges at 300 and 350 from 2006 to 2007 or 150 X 2.


Trade ranges will eventually contract to 300 pips then 150 particularly when DXY approaches 96.00’s and EUR/USD to 1.1300’s at 5 year averages. Currency prices cycle in 50 pip increments over 2 year periods and move exceptionally slow. Trade ranges will contract to 400 and 450 then 350 to 400 and settle to 300 and 350.


Count 50 points less for current SPX at 200 and 250 weeks to trade 150 to 200. Gold, Silver, Commodities, interest rates and yields all trade less ranges than DXY while Nasdaq and Dow Jones trade higher ranges than DXY. DXY is the driver and foundation to all market prices and built into the numbered market system. SPX for example can’t trade higher ranges than DXY.


DXY at 106.42 and SPX 3992.93 are exact same instruments tied in a marriage by a decimal point as is every financial instrument across every nation.


DXY


This week’s target at 106.26 as written Friday achieved target on Friday. Count 100 pips to the next target at 105.04. Higher DXY must clear above upper 108.00’s to target 111.00’s. Targets, supports and resistance levels are located at every 125 pips. Movements are backed in the cake.


EUR/USD


Break below 1.0050 targets easily 0.9970 then 0.9891. Target this week is 1.0130 and easily achievable upon a break at 1.0210.


Trade Ranks


EUR/USD, EUR/CAD, USD/JPY, AUD/JPY, AUD/USD, EUR/AUD, NZD/USD, CAD/JPY, USD/CAD, EUR/NZD, AUD/CHF, NZD/CHF, CAD/CHF, EUR/JPY, NZD/JPY.


Exclude the best of 15: EUR/USD, USD/JPY, EUR/AUD, EUR/CAD, NZD/USD, CAD/JPY, USD/CAD, EUR/NZD, CAD/CHF.


Overall best trades are EUR/USD, GBP/USD, USD/JPY. Least favored is AUD/USD as AUD has problems.


JPY cross pairs are oversold. Best trades are GBP/JPY and CAD/JPY. Oversold CAD/CHF will assist CAD/JPY higher.


USD/CAD must clear 1.3370 but the main line is located at 1.3500’s and dropping as DXY by 100 pips per week. Above 1.3300’s targets 1.3400’s and a roadblock at 1.3500;s.


As DXY supports and resistance levels are located at every 125 pips, EUR/USD is located every 117 pips. GBP/USD is the best trade at 142 pips then GBP/JPY at 152.

FED Funds Vs 10 year Yield

Fed Funds at 3.83 is matched by the 10 year at 3.81. Fed Funds must trade lower or the 10 year must trade higher as this relationship cannot hold.

Overall, good movements and a great trade week ahead.

Brian Twomey

FX Next Week and EUR/USD Long Term

The EUR/USD driving average is located at 1.0805. Recall past writings. The target on a break of the 5 year average at 1.1400’s was 1.0800 but EUR/USD decided to travel an additional 800 pips to 0.9500 bottoms.


DXY 95 break at the 5 year average targeted 103.00’s and decided to travel an additional 1100 pips to 114.00’s. The EUR/USD drop to 0.9500’s and DXY rise to 114.00’s was unaccounted by 5 and 50 year averages or 600 monthly averages. Where was the true average? 60, 80 year monthly averages.


In the life of trading and markets, we may never see again a market price so over and undervalued to trade at 50 year averages, especially from normal currencies such as EUR/USD and DXY. Only cross pairs and JPY contains ability to trade to such extraordinary depths yet remains rare.


For the first time since March 22 when EUR/USD broke below 1.0800, EURUSD at 1.0223 normalized to account for a respectable average but only for the short term. Longer term, EUR/USD remains deeply oversold from target averages at 1.1100’s, 1.1300’s and 1.1600’s.


Next targets longer term are found at 1.0592, 1.0798 and 1.0967 upon a break at 1.0805. Not only is EUR/USD oversold but its price remains extrardinarily low. Short term, next targets are located at 1.0375, 1.0417 and 1.0592.


Massive supports from rising averages are located at 1.0044, 1.0004 and many averages at 0.9900’s.
Higher EUR/USD faces the challenge of seasonality when EUR/USD begins its 6 month drop from December/ January to May/June while DXY and USD/JPY begins its 6 month rise for the same period December/ January to May /June. EUR/USD trades its lowest lows for the year in January.


Next Week


Main drivers this week as well as next week are USD and non USD currencies. Cross pairs follow. Best trades are EUR/USD and GBP/USD then USD/JPY and USD/CAD.


EUR/USD trades overbought and due for a correction to 1.0168 and 1.0127 easily.


DXY faces massive hurdles at 109.25, 110.20 then 111.00’s and 112.00’s. DXY from 107.00’s and 5 and 50 year averages at 95.00’s and 96.00’s reveals DXY and USD currencies contain a long long way to drop. Next target for next week is 106.26.


USD/JPY break below current 142.64 was not only extrardinarily but this average held for the past year. We’re long for next week to target 140.00’s and 141.00’s.


USD/CAD as written last week held at 1.3600’s. From last week, 1.3418 broke and traded to 1.3284 lows. Break of 1.3380 targets higher for USD/CAD.


GBP/USD target at 1.1887 achieved 1.1775. Next week targets high 1.1600 as GBP/USD big break is located low 1.1600’s to trade much lower.


AUD/USD trades comfortably above 0.6599 and only a break at 0.6647 challenges 0.6599. Short for next week remain the overall strategy however a higher AUD would serve a better short trade for maximum profits. Same for NZD.


GBP/AUD drives EUR/AUD at GBP/AUD 1.7589. EUR/AUD holds comfortably above 1.5236.

Divergence between GBP/AUD and EUR/AUD builds and both may remain last on the trade rank list.


GBP/JPY must clear above 165.27 to travel higher and allow all JPY cross pairs to follow. Last week’s post, break 165.72 targets 164.00. GBP/JPY traded to low 163.00’s.


Overall next week is a range trade week.

Brian Twomey

Mid Term Implications

To understand the mid term elections, the implication of 2020 sits at the forefront.


Democrats first were successful to change state vote laws, after failed attempts in Congress, to allow not only mail in ballots but placement of drop boxes across voter precincts. Once complete, domestic and foreign organizations set up shop in states where Trump had a chance for victory.


Money poured in by the buckets to pay organizers, mules to deliver ballots, drop boxes and all personnel involved. Democrats are far superior than Republicans to finance and organization particularly when Democratic organization are never formally connected to the formal Democratic Party. Democrats claim plausible deniability.


To guarantee mail in ballots would count despite names, dates and required information, election computers were connected to the internet. Election theft was not only guaranteed but suspicion exist to Iran, Russia and China were involved in the 2020 election. See the Chinese organization Konnech. A citizen in Mongolia with computer knowledge could vote. And every vote for Biden.


All the work was done for Biden while he sat at home as he never had to campaign.
State after state election reports reveal the same scenario to election theft. True the Vote revealed how it was done.


True the Vote by using cell phone trackers, followed the organizations then connected and followed ballot mules from organization to drop boxes. In Arizona alone, ballot mules visited drop boxes 1000’s of times throughout any given day. Cameras were eliminated or adjusted to drop box view.


The evidence to theft goes far beyond circumstantial but state legislatures in Georgia for example refused to hear election claims as well as local, state and the Supreme Court. Can we honestly believe Biden received 20 million more votes than Trump.


Trump was a horrendous threat to not only gazillions of past Democrat felonies but Trump would’ve stopped the Great Rest and ESG concocted by the World Economic forum and accepted by the United States, nations and international organizations such as the United Nations.


Can we honestly believe Democrats won last night against issues pertaining to Crime, Inflation, open borders, oil and gas and public school issues.


The number 218 to the House of Representatives is important for public consumption as this number solidifies a Republican majority. But its far more important to the rules and operation of the house.


The number 218 allows for Discharge Petitions to be voted out of Committees. Suppose a bill or investigative report is locked up in committee by majority vote. Any member of the House files a Discharge Petition to have the bill or report released immediately and sent to the House Floor for vote consideration. A Discharge Petition bypasses the Majority Leader of the House whose job is schedule floor votes and to decide which laws may be voted.


Takes 218 members to vote a Discharge Petition and appears the Republicans lack the requisite 218 vote threshold.


The positive to Republican majority of the House is all revenue bills to include taxes begins in the House by Article 1, Section 8 of the Constitution. Republicans have ability by majority vote to stop spending.


Republicans under a 290 majority of the House, fails to gain power to expel a member as 2/3 majority vote is required under Article 1, Section 5. Democrats voted to the House remain in the house.


As the Senate remains unsettled, a Republican loss means loss of impeachment powers and power to reject by vote all Biden’s political appointments under Article 1, Section 3.


The only advantage gained by the Republicans for 2022 is to stop spending.


The losers to the elections are the populations as they remain hostages to authoritarian powers and grows more powerful as the days go by.


Interesting to populations is government always contained population control as targets and source of power beginning with Thomas Malthus Theory of Population in 1826.

Malthus eliminated any past theories of social contracts between populations and governments by Locke, Bentham, Rousseau and many others.


Malthus wrote populations increase while the land remains fixed therefore population will starve to death. This statement petrified populations and warranted governments to intervene.


Since Malthus, as an aside, Economics was forever known as the Dismal Science.

Brian Twomey

FX Weekly: EUR/USD and DXY at Crucial Junction

The EUR/USD and DXY relationship begins the week at crucial inflection points at EUR/USD 1.0012 and DXY 111.00’s and 113.00’s. DXY broke the 5 year average at 95.00’s last January and traded 1900 pips in September to 114.79 highs. EUR/USD broke below the 5 year average at 1.1400’s and traded 1900 pips lower to 0.9500’s.


Since DXY achieved 114.79, DXY traded lower highs for the past 5 weeks while EUR/USD traded higher lows for the same 5 weeks.


EUR/USD at 1.0012 is the vital average and developed from the break at 1.1400’s and followed EUR/USD lower every week since last November when EUR/USD broke the 5 year average.


DXY from 50 year averages written last September. The top from 110.72 to 111.55 normalizes the DXY price from 40 and 50 year averages. Above 110.72 and 111.55 begins overbought from 40 and 50 year averages.


Overbought means count another 100 pips and every 100 pips from 111.55. Above 111.55 for example then trades 112.18, 112.20, 112.24, 112.29 and 112.36. Then next comes 113.00’s and 114.00’s. DXY for the past 5 weeks traded highs at 112.86, 113.90, 113.95, 112.50 and 113.16.


DXY for the past 5 weeks struggled to move higher from crucial 110.00’s and 111.00’s to target lower highs at 113.00’s.


DXY from 110.76 open this week is no different from the past 5 weeks as many vital points exist at 111.00’s to target high 113.00’s. DXY 111.00’s begins at 111.28, 111.38, 111.71 and most important 111.83.
DXY lower traded 100 pips higher targets over the past 3 weeks from 107.00’s, 108.00’s and this week at 109.00’s.


DXY weekly range is located from 109.00’s to 111.00’s then overbought from 111.00’s to 113.00’s.
DXY from the 40 and 50 year averages at 95.00’s and 96.00’s is matched by EUR/USD’s 5 year average at 1.1398.


The Week


EUR/USD from the 0.9957 open trades 55 pips to vital 1.0012 and targets 1.0060 and 1.0108 on a break higher while a failure at 1.0012 targets easily 0.9821.


The EUR/USD and DXY relationship and price resolution is responsible for every market price traded this week.


Gold for example as XAU/USD follows EUR/USD higher and lower. Lower for Gold must break 1.1658 and 1.1650 to target low 1600’s and .1597 or higher to target 1720’s. EUR/USD fails to break 1.0012 then GOLD trades lower.


USD/CAD at 200 pips is caught between vital 1.3600’s and big break for lower at 1.3418. USD/JPY is well prepared by 300 pip ranges from 145.87 to 148.56. Not much difference over the past 3 weeks.


GBP/USD at vital 1.1598 and from the 1.1372 open trades neutral and will follow EUR/USD. Same for AUD/USD at vital 0.6579.


NZD/USD opens at 0.5927 and trades 17 pips from crucial 0.5944 and offers much downside to 0.5742 if 0.5944 fails to break higher.


NZD/USD lower requires an assist by NZD/CHF to break 0.5856 and NZD/CAD to break lower at 0.7965.


USD/JPY and JPY Cross Pairs


While USD/JPY trades 300 pip ranges, GBP/JPY vitals are located from many points at 168.00’s to 165.72. Below 165.72 targets 164.00’s. Best trades this week are GBP/JPY, EUR/JPY and NZD/JPY. CAD/JPY is good also while NZD/JPY begins the week severely overbought.


GBP/CAD and EUR/CAD


GBP/CAD begins the week severely oversold while EUR/CAD lacks a clue to direction. Short NZD/CAD highs all week and watch 0.7965.


Higher but short only strategy for EUR/AUD, GBP/AUD and EUR/NZD. GBP/NZD is the outlier this week along with GBP/CAD as both begin the week massive oversold.


Overall, DXY and EUR/USD vitals are growing closer by the week and cannot hold much longer as we must see a larger move to create wider trade ranges.

Brian Twomey

FX Next Week: Trade Opportunities

GBP/JPY achieved target at 168.31 from 172.00’s. USD/JPY range 145.84 to 148.77 Vs actual 148.84 -145.66. Next week: 145.87 – 148.65. Large ranges for USD/JPY otherwise, nothing special.


From the FX weekly on Sunday, DXY 112.10 was the big line once DXY cleared the many hurdles at 111.00’s. DXY dead stopped yesterday at 112.15. For the FED, DXY traded 161 pips and every 77 pips reported as support and resistance points or 77 X 2 = 154.


For the Fed yesterday, DXY 110.99 vs EUR/USD 0.9916. EUR/USD began at 0.9872 and DXY at 111.47. Neither price was touchable as immediate long or short. This is typical for all central bank meetings as every market price currency or otherwise begins at a neutral position.


DXY broke 110.99 to 110.43 or 66 pips while EUR/USD traded above 0.9916 to 0.9975 or 59 pips. If ever free money existed in trading, yesterday’s example was prime. DXY from 110.43 didn’t have a choice except to long to minimum 110.99 while EUR/USD also didn’t have a choice except to trade lower to 0.9916.


In the larger scenario, all USD pairs had to trade long and all non USD short. The potential was 60 pips per currency and free money.


The Fed by itself holds no value of importance since the Fed is just another central bank and holds the same dilemmas and challenges as all central banks.


Consider movements. RBA raises 50 points and AUD/USD moved 30 pips, BOC raised 50 and USD/CAD traded 60 pips. No value to profits exists in central bank meetings anymore as was the case in the old days.


The value for Fed meetings is DXY as the determination to every market price on the planet. DXY price effects every stock, currency, yield, interest rate. If not for DXY, Fed meetings would trade 30 and 50 pips.


BOJ


As written and suspected, the BOJ intervened twice, Sept 30 for 2838.2 billion and October 31 for 6349.9 billion. The BOJ history throughout is never intervene once but many times. Caution exists to further interventions especially if the BOJ fails to raise rates.


The Week


DXY 115.00’s drops from contention to favor topside at 114.00’s. DXY remains in a 100 pip per week drop. Tops are located at low 113.00’s and the same story as this week. Lower targets are located at high 109.00;s. Support and resistance points are located every 53 pips.


DXY ranges from high 109.00’s to low 113.00’s or 300 ish pips.


As weekly DXY drops, the strategy moving forward is short USD, long EUR/USD and non USD.
EUR/USD big break for higher is located at 1.0012 and next week ranges from 0.9813 to 0.9714.


JPY Cross Pairs


EUR/JPY, CHF/JPY and GBP/JPY trade just above vital 143.08, 145.12, and 163.61 while AUD/JPY and NZD/JPY trade oversold from 93.91 and NZD/JPY 84.69. AUD/JPY and GBP/JPY are best trades for next week.


USD/CAD and massive overbought USD/CHF contain short only strategies while USD/JPY trades in wide ranges.


GBP/USD targets 1.1400’s from current 1.1200’s.


GBP/AUD and EUR/NZD trade oversold against big line breaks at 1.7658 and 1.6894. A new marriage develops as longs for both currencies.


DXY at 53 pips to support and resistance offers an average trading week ahead.

Brian Twomey Contact brian@btwomey.com

FX Weekly: DXY 111.00’s Determines the Week

DXY from the 110.67 close faces massive resistance throughout 111.00’s from 111.04, 111.19, 111.66 and 112.10. Above 112.10 targets middle 113.00’s then short. Failure to break 111.00’s targets 108.00’s.


From current 110.67, targets at 116.00’s drops from contention in favor of 115.00’s as DXY upside is dropping about 100 pips per week. Targets are located every 77 pips and every 72 pips for EUR/USD which means good moves expected this week and EUR/USD will trade almost pip for pip to DXY.

As DXY continues its weekly drop, short USD/CAD and USD/JPY becomes the strategy and long EUR/USD and GBP/USD, AUD and NZD.


JPY Cross Pairs


JPY cross pairs trade severely overbought for 3 weeks running and traveled higher in each of the past 3 weeks. As JPY leader, GBP/JPY broke its 3 year range from 148.00 to 168.00’s and advanced to 171.00’s.

GBP/JPY expedited all JPY cross pairs to trade higher. GBP/JPY now trades overbought from short averages from 5 to 253 days and from long averages at the 5, 10 and 14 year. Target for GBP/JPY is 168.30’s as oversold doesn’t begin until 166.00’s and 164.00’s.


As USD/JPY 147.43 and EUR/JPY 146.83 trade the exact same exchange rates, the overall strategy is short USD/JPY and JPY cross pairs with GBP/JPY leading all currencies lower.


USD/JPY ranges for the week trades from 145.84 to 148.77 vs last week 145.35 to 148.40. Overbought begins above 148.77.


EUR/NZD Vs GBP/AUD and GBP/NZD


GBP/AUD began the month at 1.7200’s and EUR/NZD at 1.7000’s. While EUR/NZD traded to 1.7500 highs, GBP/AUD crossed above EUR/NZD 1.7500’s and achieved tops at 1.8100’s. As GBP/AUD and EUR/NZD fought the battle of dominance, GBP/NZD was absent as leader to EUR/NZD and its only choice was follow EUR/NZD yet GBP/NZD traded 200 pips for October.


GBP/AUD at 1.8099 trades deeply overbought and matches overbought EUR/AUD while EUR/NZD at 1.7100’s trades massive oversold. GBP/NZD is along to follow EUR/NZD ‘s lead. Much lower for EUR/NZD on a must break at 1.6946.


GBP/USD and Cross Pairs


Oversold GBP/USD for the week vacillates against choices to trade to 1.1700’s or 1.1400’s. On a long term basis, targets are located at 1.1882, 1.2280, 1.2538 and 1.2734. GBP/USD contains ability to trade to 1.1800’s easily.


GBP/USD’s problem for the week is all GBP cross pairs are severely overbought to include GBP/JPY, GBP/CHF, GBP/CAD, GBP/AUD and GBP/NZD.


GBP as EM currencies also trades massive overbought as GBP/ZAR, GBP/TRY, GBP/PHP, GBP/SEK, GBP/NOK, GBP/MYR, GBP/HUF, GBP/BRL. GBP is especially overbought as GBP/CNY.


EUR/USD


Similar to GBP/USD, EUR/USD choices for the week is 0.9950 and 0.9902 then 0.9814 and 0.9809 or break above 1.0020 to target 1.0126. EUR/CHF sits on support at 0.9854 while EUR/JPY, EUR/CAD and EUR/AUD trade severely overbought.


As DXY is losing its upside potential, we remain long only to strategy Vs EUR/USD and GBP/USD.


USD/BGN


The Bulgarian Lev is inching closer by the week to break 1.9538 and target 1.9342.


AUD/USD trades 0.6459 to 0.6335 and NZD/USD 0.5801 to 0.5681. Lows trade only if DXY breaks above 111.00’s.


DXY 111.00’s are the deciding factors for the week to drive every financial instrument on this planet.

Brian Twomey

FX Next Week

From the weekly on Sunday: EUR/USD broke 0.9993 and first target at 1.0057 achieved destination, USD/JPY from 147.64 completed target at 148.40. DXY broke below 111.25 and traded to 109.00’s. DXY from Sunday struggled and dropped from 112.00’s.


DXY’s break below 111.25 allowed EUR/USD and GBP/USD to break above most vital levels at 0.9993 and 1.1572. EUR/CHF and GBP/CHF assisted EUR/USD and GBP/USD higher by breaks above EUR/CHF 0.9842 and GBP/CHF 1.1381.


AUD/USD and NZD/USD failed to break above vital 0.6578 and NZD/USD 0.5913 to join EUR/USD and GBP/USD. AUD/USD and NZD/USD must break above vital levels or EUR/USD and GBP/USD must drop to maintain uniformity.


EUR/USD levels for today: 1.0072, 1.0078, 1.0084, 1.0091, 1.0104, 1.0110, 1.0117 Vs 1.0015, 1.0021, 1.0027, 1.0040, 1.0050, 1.0053


Most Vital 1.0015 and 1.0040 Vs 1.0091 and 1.0117.


EUR/USD VS DXY


EUR/USD for next week must break 1.0005 and another line around 0.9950 to target again 0.9700’s. Next target above 1.0171. DXY maintains a big break at low 111.00’s to target 113.00’s. DXY traded 302 pips this week to EUR/USD 297. EUR/USD maintain perfect paces to DXY as DXY drives all markets.
EUR/USD strategy is short and long DXY and USD currencies.


Overall DXY is oversold and targets low 111.00’s or 200 ish pips higher and this takes EUR/USD to 0.9800’s if 0.9950’s break below.


USD/CAD trades oversold and just above big break for lower at 1.3423. Oversold USD/JPY maintain a range from 144.41 to 145.93. Above targets again 148.98. Watch USD/CHF at 0.9844.


JPY Cross Pairs


JPY cross pairs 2 weeks running trades severely overbought to include CHF/JPY. JPY cross pairs are range trading rather than break or focus on breaks at vital averages in order to trend. JPY cross pairs are pretty much day trades with a short only trade strategy.

GBP/JPY leads the way forward while EUR/JPY traded in tiny ranges this week.. Both USD/JPY and EUR/JPY trade just above vital 142.00’s. Much lower on a break and GBP/JPY at 164.00’s.


EUR/CAD trades massively overbought while nothing special exist to GBP/CAD except to follow EUR/CAD lower.


GBP/USD big break are located 1.1572 and targets 1.1450 and only below 1.1450targets levels back to 1.1200’s.


AUD/USD and NZD/USD trade in do or die mode to either follow EUR/USD and GBP/USD higher and break vital levels or EUR/USD and GBP/USD trade lower to take AUD/USD and NZD/USD down. Lower for AUD/USD targets 0.6300’s and NZD/USD middle 0.5600’s.


AUD/USD trades practically pips for pip to AUD/EUR and explains EUR/AUD trading in tiny ranges over last weeks. Both AUD/USD and AUD/EUR trade oversold.


GBP/NZD trades overbought vs oversold EUR/NZD. EUR/NZD leads the way for GBP/NZD as EUR/AUD dictates moves to GBP/AUD. Best strategy is shorts to EUR/AUD and EUR/NZD. AUD/USD 0.6578 and NZD/USD 0.5911 holds EUR/AUD and EUR/NZD progress to trade in wider ranges.

Brian Twomey

USD/JPY and BOJ Intervention: 1991- 2022

The Japanese Ministry of Finance releases intervention data every month as leaders to recommend intervention. The BOJ simply applies recommendations under Article 7, Section 3 of the Foreign Exchange and Foreign Trade Act.


Why the question of intervention is vital to today’s traders is because the Japanese don’t ever intervene once and the exchange rate price is settled. The Japanese intervene many, many times during any given month.


Take for example June 1993 when the BOJ intervened 10 times during the month. This is common practice to BOJ intervention. The BOJ intervened 5 times in November 2011 and once October 2011, August and March. Fukishma was the issue then.


The other question is why intervene now when interventions became practically non existent to currency markets since early 2000’s and the 1990’s. Will intervention lead other central banks to intervene or coordinated actions by central banks.


Is intervention the first action to 1930’s style export wars. Export wars of the 1930’s caused volatility as never seen again in currency markets. The swing in prices was far more extraordinary than ever witnessed today. The 1930’s wars gave us Bretton Woods and 1% exchange rate movements in dead currency markets.


In all instances of intervention since 1991, the BOJ never involved themselves in coordinated actions but instead flew solo.


The current data dates to May 1991.


The commonality to intervention months was January to April and rarely June and July. But most specifically March, April and May are heavy intervention months. April represents Japanese budget years and a low yet specific exchange rate is required to fund the budget.


More importantly, USD/JPY begins its 6 month yearly cycle rise from January to April and May. USD/JPY normally achieves its highest yearly level in April then drops to allow EUR/USD to rise from May and June to December.


Remaining months are extraordinarily rare for interventions. Last time the BOJ intervened in October was 2003 and 1994. Next comes 5 times for September, 1993, 1994, 1995, 1999 and 2000. Then comes 4 times for November and 3 times for December 1997, 1999 and 2003. The BOJ intervened once in August 1992.


From May 1991 to August 1992, the BOJ intervened in USD/JPY to short USD and long JPY or buy USD and sell JPY. Then a change occurred. From April 1993 to 2011, the BOJ intervened and bought USD and sold JPY.


For the BOJ to intervene in September to sell USD and buy JPY represents an enormous change to the past 18 year practice.


From 1991 to 2003, the BOJ intervened to USD/JPY nearly 300 times. From 1991 to 2022 or 31 years represents 372 months.


While USD/JPY is the prominent intervention currency, the BOJ began intervention once in August 1993 to buy DEM German Marks and sell JPY. November 1997, the BOJ 5 times intervened to sell USD and buy IDR, the Indonesian Rupiah.


As EUR/JPY and the Euroyen interest rate was introduced in 1997, 1998, the BOJ intervened 3 times in June and November 1999 quite heavily to buy EURO’s and sell JPY. Intervention to EUR/JPY began again to buy EUR, sell JPY March and September 2000. September 2001 and June 2002.


Year 2003 was the last year to intervene on EUR/JPY by 2 times in February 2003, 3 times for March 2003 and once May 2003.


BOJ intervention costs begin around 100 million. Take May 9, 2003 as an example. The monthly range was 119.63 to 118.08. The USD side at 118.08 converts to JPY at 17622.3. Intervention costs 2166. Intervention costs are never at the reciprocal exchange rate as reported by news services. Intervention at the reciprocal exchange rate would vanquish the 1.3 trillion BOJ reserves.


May 9 range to buy USD, sell JPY was 117.59 to 117.02. May 12 range at 3302, traded 117.37 to 116.20. May 13 traded 117.53 to 116.34 at 3037. The BOJ intervened 13 times in May 2003 to miniscule ranges.


While USD/JPY in May 2003 traded 119.63 to 118.08 or 155 pips, DXY traded 97.46 to 92.57 or 489 pips. From 119.63 to 97.46 or 2200 pips and 2500 at 118.08 and 92.57. Current USD/JPY 149.31 and DXY at 112.29 or 3700 pips. As reciprocals 0.0066974 Vs DXY 0.0089055 or a spread at 0.0022081. If a warning shot existed to intervention, possibly its found in the USD/JPY and DXY spread.


Japanese Call rates trade roughly 8 points per day and covers JPY/USD while ECB interest rates trade 15 ish points per day Vs 20 points for Fed Funds. Not much to deduce from this data to intervention.

Brian Twomey

FX Weekly: JPY, Intervention, EUR/USD and GBP/USD Targets

Currency markets begin the week in solid and horrible neutral positions as trading ranges expanded. The outlier to neutral is severely overbought JPY cross pairs and overbought across all JPY pairs. Top 4 currencies in order: GBP/JPY, EUR/JPY, CAD/JPY and NZD/JPY. No thrills exist to AUD/JPY.


The question to Japanese intervention is JPY/USD 22,301.95 equates to 151.00 USD/JPY but the Ministry of Finance spent 2 billion Yen or $13 million USD to intervene at 146.00. Past intervention costs in the 1990’s began at 100 million Yen or roughly $600,000 in today’s rates but USD/JPY was 87.00’s and 90.00’s then so much lower to cost.


As the USD/JPY price travels higher then the cost to intervention rises. Any cost to possible intervention on Friday won’t be known until the monthly release by the Ministry of Finance. I submit no intervention existed Friday and the 146.00 intervention was a one off.


The problem is not USD/JPY but JPY/USD is becoming to low in relation to Japanese Call rates. The Japanese maybe forced to raise Call Rates particularly if DXY travels higher against continued Fed Raises.


The opportune time to intervene was when USD/JPY traded 120.00’s while DXY broke above the 5 year average at 95.00’s. The DXY break may have caused the USD/JPY trajectory to travel lower however USD/JPY and DXY are exact same pairs so the DXY break higher forced USD/JPY higher.


The Week


Trade Rankings


USD/JPY, AUD/USD, NZD/USD, USD/CAD. JPY Cross Pairs= EUR/JPY, NZD/JPY, CAD/JPY, EUR/AUD, EUR/CAD, EUR/NZD, EUR/USD.


We’re cautious and avoiding CHF Cross Pairs, GBP/CHF, GBP/NZD, GBP/CAD and not thrilled to EUR/CAD unless a resolution to 1.3389.


Total 3 GBP pairs earn rankings as GBPUSD, GBP/JPY, GBP/AUD. Overall, EUR//AUD and EUR/NZD are better pairs to trade.


USD and non USD are prime movers this week to cross pairs.


DXY faces headwinds at 112.02 and 112.81 and only then does DXY target 114.00’s. Break of 111.25 targets easily 109.00’a. DXY targets are located 57 pips and every 42 pips for EUR/USD. DXY 117.00’s drops from contention to long term forecasts.


Figure DXY and you’ll have markets licked.


EUR/USD big break for higher is located at 0.9993 and first target is easily 1.0057.

USD/JPY’s next target and big break is found at 148.40 in a range from 145.35 to 148.40.


GBP/USD end of week target is located at 1.1159 and EUR/USD at 0.9675 provided 0.9789 break lower.

Brian Twomey

GBP/USD Vs GBPCHF and EUR/USD

GB/USD opened the week at 1.1176 and GBP/CHF at 1.1232 or 56 pips. The spread from overnight trading compressed to right at 10 pips at GBP/USD 1.1273 and GBP/CHF at 1.1283.


GBP/USD Big break for the week is located at 1.1326 then 1.1400’s and GBP/CHF 1.1311. GBP/CHF at 1.1311 is far more important than GBP/USD 1.1326 as 1.1311 signifies GBP/CHF trades much higher and GBP/USD follows.


GBP/USD for today must clear 2 hurdles: 1.1260 and 1.1280. Above 1.1280 targets maximum level at 1.1336.


GBP/USD 1.1336 and 1.1326 then operate as a brick wall and short is the only trade. Below targets 1.1224, 1.1231 and 1.1238 then long again. Most vital is GBP/CHF bottom today at 1.1241.


Watch GBP/USD at the GBP/CHF bottom at 1.1241.


Note GBP/USD and GBP/CHF last on the GBP weekly trade rankings as follows: GBP/JPY, GBP/AUD, GBP/NZD, GBP/USD, GBP/CHF, GBP/CAD .


Easy trades and easy money achieve high on the list rather than struggle through the GBP/USD and GBP/CHF dilemma. Far better trades exist although GBP/USD and GBP/CHF contain both daily and weekly trades.

Shorts all week to GBP/JPY, GBP/AUD and GBP/NZD.


Highlighted GBP as a mix match of exchange rates are rare days seen in markets. Remember USD/CAD Vs EUR/JPY or USD/CAD Vs EUR/CAD. Today its CHF.

Remainder currency rankings: EUR/USD, EUR/JPY, AUD/USD, EUR/AUD, NZD/USD, USD/CAD, EUR/CAD, EUR/NZD, USD/JPY, AUD/CHF, NZD/CHF, CAD/CHF, CAD/JPY, AUD/JPY, NZD/JPY.


Best from the overall: EUR/USD, EUR/JPY, AUD/USD, EUR/AUD, NZD/USD, USD/CAD, EUR/CAD, EUR/NZD, USD/JPY, AUD/CHF.


EUR/USD Weekly


Long 0.9665 and 0.9661 to target 0.9772. Entry lies just above 0.9586.


EUR/USD Bottom today is located at 0.9692, 0.9699 and 0.9716. Long at the lows for quick pips today but weekly trade entry won’t be seen. The ECB at 10 am may push EUR a few pips lower however not enough for trade entry.

ECB at 10 is becoming more and more irrelevant to day trading as well as the 11 am London FIX which means currency markets are changing yet again to the next phase.

Brian Twomey