Long Term: EUR/USD, GBP/USD, USD/JPY

GBP/USD official break is located at 1.2588 to target 1.2721. To challenge 1.2588 and break, GBP/USD must hold above 1.2515, 1.2551, 1.2471 and 1.2441. Overall longs are safe above GBP/USD 1.2350.

For next week, GBP/USD overbought begins at 1.2550’s. A lower GBP/USD allows another shot at longs. The bottom below 1.2441 is located at 1.2419.

GBP/USD above 1.2588 trades 259 pips from 1.2588 to 1.2847. GBP/USD above 1.2847 trades 399 pips from 1.2847 to 1.3246. Historically from a very long term perspective, GBP/USD is comfortable to trade 1.2847 to 1.3246. In months down the road, GBP/USD has every opportunity to trade 1.2847 to 1.3246.

EUR/USD big break is found at 1.0924 to target 1.1037. Vital levels 1.0852, 1.0924, 1.0937, 1.0985. EUR/USD longs are safe above 1.0738. Below 1.0738 then back to 1.0600’s and long again.

USD/JPY extreme prices are located at 140.45, 141.46 and 142.47. USD/JPY at 139.00’s trades at the upper end to extremes. USD/JPY not only trades at maximums from 137.00’s but lower averages trade severely overbought at 121.00’s, 117.00’s and 114.00’s.

USD/JPY must cross below 137.42 and 135.89 then USD/JPY is gone to target 129.87 and challenge the vital break at current 127.60. Below 127.60 then targets 126.41 and final target at 123.69.

The ironic aspect to the USD/JPY forecast is the BOJ agrees as the BOJ methodoilogy is known long in advance.

the USD/JPY weekly target at low 138.00’s traded to 138.75 from highs at 140.24. Monday, USD/JPY heads lower.

GBP/USD Vs USD/JPY

The longest term perspective to GBP/USD Vs USD/JPY trades as GBP/USD 1.4074 Vs USD/JPY 124.18. Both GBP/USD and USD/JPY are longest term targets. Historically, the GBP/USD price is very low and USD/JPY extremely high.

GBP/USD by exchange rates alone is the best partner to USD/JPY in the G28 universe.

EUR/USD Vs USD/JPY trades as

EUR/USD 1.4252 to USD/JPY 104.66. The alignment runs as EUR/USD 1.0963 Vs USD/JPY 137.61, EUR/USD 1.1163 Vs USD/JPY 135.61, EUR/USD 1.1563 Vs USD/JPY 131.61.

EUR/USD validates the USD/JPY break at 137.00’s and 135.00’s.

Brian Twomey

FX Next Week

The conclusion to yesterday’s probabilities for central banks to change interest rates are permanent probabilities as 23% to 77%. One step further is 23%, 50% and 77%. Any forecasts above 77% and below 23% is wrong.

The currency wars of the 1930’s and Bretton Woods 1% exchange rates taught us the modern day market concept to Competitive Advantage. Interest and exchange rates must maintain balance and alliances to each other’s central bank rates. An interest rate adjustment to a central bank requires an equal reaction from all central banks to maintain Competitive Advantage. This explains the permanent probabilities.

The 1930’s Currency Wars experienced Competitive Devaluations to exchange rates as the French worked exceedingly hard to destroy GBP and drive GBP’s exchange rate to zero.

The 30 day interest rate rate alliance to the main central bank rate is to close to forecast accurately. Market probabilities use Markov Chains or the answer to what is the here and now probabilities. Easier ways exist to forecast interest rate changes.
USD/CAD traded 64 pips from the BOC interest change or 15 pip minimum to 67 max. This is the new 2022 interest rate arrangement by central banks.

Next week

DXY will again maintain the 104.00 to 103.00 range to guarantee slow market movements. DXY must maintain prices below low 104.00’s for decent EUR. GBP and USD/JPY moves. DXY is holding up market movement progress.

EUR/USD vital break for higher at 1.0738 targets easily 1.0800’s then the most important break at 1.0900’s.

USD/CLP traded 802.40 to 790.75 and Copper 3.8131 to 3.6860. The relationship traded as USD/CLP 792.65 = Copper 3.8140 and USD/CLP 799.00 to Copper 3.6860.

GBP/USD 1.2343 maintains a slow rise to the eventual break at 1.2587 then the 1.2700 target. GBP/USD 1.2587 won’t break higher next week. The best seen so far is 1.2550.

USD/CAD since December maintained a 300 and 400 pip range per month. November was USD/CAD’s best range month at a 600 pip range.

USD/JPY becomes severely overbought next week at 104.40. Lows achieved 139.01 this week. Next week again targets low 138.00’s and the same targets as this week. USD/JPY must break 137.38 to target lower but a DXY drop must assist otherwise USD/JPY holds to the 138.00 to 140.00 ranges.

GBP/JPY held the 33 year monthly average point at 174.83. A break next week can only offer 175.25. The overall range is located at 600 pips from 169.55 to severely overbought at 174.83 and 175.25.

EUR/AUD achieved the target at 1.5900’s as reported in April and prior months. April highs traded to 1.6700’s. The target at 1.5900’s trade duration was 2 months. Previous EUR/AUD targets at 800 ish pips trade duration was 6 and 7 weeks so EUR/AUD is on track from previous years.

EUR/AUD has easy ability to trade to 1.5800’s. Current break for higher at 1.6143 targets 1.6194 and 1.6225. Then short again.

The GBP/AUD performance over the past 2 months failed to maintain the same paces as EUR/AUD. GBP/AUD traded 1.8600 to 1.9100 or 500 pips for the last 2 months. The bottom at 1.8569 is the exact levels to break for GBP/AUD to trade to the long standing target at 1.8200’s.

Over many years, EUR/AUD was always the preferred currency to trade. GBP/AUD is undecided to either trade alongside EUR/NZD and trade dead ranges or trade with GBP/NZD. Trade with GBP/NZD then GBP/AUD hits an explosive day then back to dead range trade days.

EUR/JPY iat the upper 150.00’s becomes overbought next week to target 149.79 then 148.63. Both easy targets to achieve.

GBP/NZD traded overbought at 2.0500’s. Lows traded to 2.0390 this week. Next week targets 2.0262 then 2.0100’s. GBP/NZD is the preferred trade to EUR/NZD as GBP/NZD will outperform EUR/NZD.

GBP/CAD 1.6673 then higher while EUR/CAD trades deeply oversold at 1.4300’s.

Brian Twomey

RBA and 30 Day OCR Tracker

This from the morning post. Central bank meetings since 2000 occurred every 6 weeks and accounts for 263 RBA meetings and 62 OCR changes or 23% of meetings experienced OCR adjustments. In RBA 201 meetings, no OCR changes. Probabilities run as 80% chance to no OCR adjustments.

In probability terms should run 23% to 77% to account for 100%. Means Probability forecasts can’t go blow 23% nor above 77%. Any percentage number above or below is wrong and makes the forecast wrong.

Since central banks follow each other to interest rate raises and drops, 23% to 77% must pretty much satisfy all forecasts to all central bank meetings. So overall we have 23%, 50% and 77%.

The 30 Day Australia OCR tracker on June 6 said 63% no change to 37% change. The Tracker factors to 100%. RBA raised anyway. So the change to no change should’ve read as 63% raise to 37% no raise. Better yet is the 23% to 77%.

Obviously the correct manner is the 5 day rule to eliminate all the not correct aspects to markets and much exists. But its imperative to use 90 day rates rather than 30 as we know, 30 day is always wrong.

Here’s the latest 30 day

2 June

63%

37%

The table below highlights how market expectations of an interest rate increase at the next RBA Board meeting has evolved in recent days.

Trading Day	No Change	Increase to 4.35%
29 May	100%	0%
30 May	100%	0%
31 May	100%	0%
1 June	100%	0%
2 June	100%	0%
5 June	100%	0%
6 June	89%	11%
7 June	82%	18%

On and before RBA day, the tracker was still wrong.

Brian Twomey

RBA and OCR since 1990, EUR/AUD, AUD/USD and EUR/USD

From the weekly, No indications exists for the RBA to raise. But this was the market perspective. Traditional interest rate markets forecast interest rate changes long in advance so to not disrupt markets nor cause unwanted volatility. To address the FX and long forgotten topic to Budgets runs counter to market forecasts.

Australia government budgets are addressed and submitted in the May / June period. This year’s budget was submitted May 9 to Parliament. May / June accounts for time to allow Appropriation Committees in Parliament to pass budget bills. Then the mid year review in November / December is factored and possibly revised to questions of yearly outlays and expenditures.

Dating to 1990, the RBA changed OCR a total of 13 times in May. Upon mid year review in November/ December, OCR was changed 12 times in November and 11 times in December. No other months comes close to OCR changes.

March, August and October each records 8 times to OCR adjustments. Those months account for late budget submissions and Parliamentary delays to hearings, appropriations and eventual passage.

Since 1990, 25 point OCR adjustments is most popular as the RBA raised 29 times compared to 21 decreases. The RBA raised 4 times at 50 point changes to 10 OCR drops at 50. The RBA raised OCR by 75 points only once in August 1994 and dropped OCR by 75 points 3 times. RBA at 1.00 was raised 2 times to 9 drops. The last 1.00 change was a drop in 2008.

The RBA’s formula is OCR adjustment in May / June is followed by an equal change in November / December. If for example, the RBA raises OCR in May by 25 points then an equal 25 point raise is seen in November / December. The opposite holds true for OCR decreases. A drop by 25 points in May is followed by an equal 25 point decrease in November / December.

Since January 1990, the RBA changed OCR 78 times to 378 meetings or an adjustment at 20% of all meetings. In 300 meetings, no changes occurred to OCR.

Central bank meetings since 2000 occurred every 6 weeks and accounts for 263 RBA meetings and 62 OCR changes or 23% of meetings experienced OCR adjustments. In RBA 201 meetings, no OCR changes. Probabilities run as 80% chance to no OCR adjustments.

EUR/AUD

From April and long term targets with weekly updates: EUR/AUD targets 1.6021 then 1.5938. EUR/AUD traded to 1.5977 lows and almost at its final destination at 1.5800’s.
EUR/AUD higher must break 1.6158 to target 1.6200’s easily. On the way up to 1.6158 is located 1.6052 and 1.6105. EUR/AUD becomes oversold starting at 1.5946.

AUD/USD above vital 0.6647 targets 0.6707 and 0.6722 and begins overbought. Below 0.6647 targets 0.6632 and 0.6617.

EUR/USD big line break for higher is now located at 1.0738 and oversold begins at 1.0642.

Brian Twomey

Flyer Thailand Trade Show

A special thank you to a dear friend for Thailand Distribution

USD/TRY V TRY/USD Day Trade

Same set up and principles as EUR/USD V USD/EUR only different names and different numbers.

USD/TRY

Long Short Line 21.1416

Most Important 21.0490 and 21.1294 Vs 21.1481, 21.1547, 21`.1678, 21.1809, 21.1941, 21.2203, 21.2466

Bottom 21.0358 achieves by 21.0620 and 21.0883

Upper Target 21.2466

Continuation Fail 21.1941

TRY/USD

Long short Line 0.0473

Most Important 0.0470 and 0.0472 Vs 0.0474, 0.0475, 0.0476

Bottom 0.0470 achieves by 0.0471 and 0.0472

Upper Target 0.0476

Continuation Fail 0.0475

USD/TRY Vs TRY/USD

Upper Target 21.2466 Vs 0.0470 or USD/TRY 21.2466

Continuation fail 21.1941 Vs TRY/USD 0.0471

Bottom 21.0358 Vs TRY/USD 0.0475

Brian Twomey

EUR/USD V USD/EUR Day Trade

This is FX 101 and posted on site many times since 2015. Both are mathematically perfect. Previous example were shown in deep detail.

EUR/USD Today 54 pips Vs USD/EUR 47. Establishes daily ranges and a fairly constant relationship these days. EUR/USD Vs USD/EUR = Perfect negative Correlation at minus 100%.

This means EUR/USD higher = USD/EUR lower and EUR/USD lower = USD/EUR higher. Both EUR/USD and USD/EUR are married to ranges as set by daily interest rates. Extremely rare day for EUR/USD and USD/EUR to trade outside daily ranges.

By this setup and known at the start of 2:30 AM EST day trades, trades are taken for multiple longs and shorts for continuous profits. And every Trade day.

EUR/USD

Long Short Line 1.0692 

Most Important 1.0644 and 1.0685 Vs 1.0698, 1.0705, 1.0712, 1.0719, 1.0732, 1.0739, 1.0746

Bottom 1.0638 achieves by 1.0651 and 1.0665

Upper Target 1.0746

Continuation Fail 1.0719

USD/EUR

Long Short Line 0.9352

Most Important 0.9310 and 0.9346 Vs 0.9357, 0.9363, 0.9369, 0.9375, 0.9387, 0.9393, 0.9399

Bottom 0.9305 achieves by 0.9316 and 0.9328

Upper Target 0.9399

Continuation Fail 0.9375

EUR/USD V USD/EUR

Upper Target EUR/USD 1.0746 Vs USD/EUR 0.9399 or EUR/USD 1.0639

Continuation fail 1.0719 Vs USD/EUR 0.9375 or EUR/USD 1.0667

Bottom EUR/USD 1.0638 Vs USD/EUR 0.9305 or EUR/USD 1.0746

Brian Twomey

USD/CZK, USD/TRY, USD/RON, USD/CNY, AUD/EM

USD/CZK shorts below 2.0853 to target 21.9993, 21.913321.8273 and 21.7413.

USD/RON short below 4.6496 to target 4.6279, 4.6171. Short below 4.6062 to target 4.5954.

USD/CNY targets 7.0647 and 7.0329.

USD/TRY 20.9632 open and Richter Scale overbought. Weekly Range 21.0748 to 20.8550. At 20.8550 remains massive overbought. Further targets 20.6013 and 20.3101.

AUD/CNY Deeply overbought from 4.6812, Targets 4.6796, 4.6711, 4.6627, 4.6541

AUD/KRW oversold 862.78. Targets 863.18,69, 867.1644, 871.1420 and 873.1307

AUD/MYR Massive overbought at 3.0229. Targets 3.0205, 3.0158, 3.0110, 3.0063 and 3.0039

Brian Twomey

FX Weekly: USD/CLP V Copper, Interest rates and Currency Pairs

Australia’s ASX 30 day Cash Rate Target Tracker informs a 37% chance for the RBA to raise to 4.10 as of last Friday and up from 22% on June 1 and May 31. Vital Bank Bill Swap rates dropped substantially since May 31 while OCR traded 3.85 to 3.82 since the last RBA raise to 3.85 on May 2. No indications exists for the RBA to raise.

The 30 day Cash Rate tracker informs a raise to 4.16 best shot occurs from August to December 2023 then begins a long and slow slide lower to 3.52 by November 2024.
Canada’s 3 month CDOR rate and traded as BAX informs a 28% chance for the BOC to raise by 25 points.

Implied rates reveal September at 88% and December at 84% as the best probability to a BOC raise by 25 points then begins lower rates until March 2026 however against low probabilities. December 2024 and March 2025 both offer a 64% probability of 100 and 125 basis point decrease and 96% probability September 2025 by a 175 basis point drop.

Central banks align as either one last raise or in preparation to drift lower and extraordinarily slow. In 2024 and 2025, writings will reveal the probabilities of a possible 25 point drop.

The key word is extraordinarily slow as central banks fully adopted phase 2 from the 2016 interest rate reshuffle by first eliminating interest rate maturities from 7 to 5 rates. The SOFR Vs Fed Funds rate serves as an example to all central bank’s latest methodologies.

Fed Funds ability to trade 25 and 30 points per day is matched by SOFR to trade 18 and 20 point days. SOFR ranges provides control to Fed Funds to ensure Fed Funds trades within its boundaries yet limits Fed Funds ability to trade full daily ranges.
All central banks not only adopted a typical SOFR rate but also created compound indexes to trade alongside the newly produced SOFR rate.

Fed Funds ability to trade full daily ranges became a rare day as central banks slashed interest rate ranges and all central banks followed.

Central banks pre 2016 were distinguished by either an interest floor or ceiling system. All central banks today are now floor and ceiling systems. Note the similarities to raise probabilities as all central bank interest rates reveal the same probabilities. Interest rate numbers from central bank to central bank are different but all interest rates trade and perform the exact same operations.

Seen in markets are rare days to trade 100+ pip days, 50 pips to interest rate changes and NFP surprises go unnoticed. EUR/USD for example traded 400 pip ranges in each of the past 7 months and broken down to 50 pip days.

The Week

AUD/USD begins the week deeply oversold and targets the break at 0.6638 to trade the target at 0.6700’s. EUR/AUD’s target at 1.6083 traded to lows last week at 1.6187 from 1.6500’s. New targets are located at 1.6119, 1.6004 and 1.5900’s. EUR/AUD opens at 1.6201 and just above the big line break at 1.6198. Higher for EUR/AUD must break a vital line at every 100 pips to 1.6500’s. EUR/AUD remains the preferred trade to GBP/AUD.

GBP/AUD is held below by 2 lines at 1.8580 and 1.8581. While EUR/AUD vital breaks are located at every 100 pips, GBP/AUD trades 200 pip ranges. The top lines for GBP/AUD are located at 1.9000’s and 1.9100’s.

EUR/USD must break 1.0743 to trade higher then EUR/USD runs into trouble at 1.0779.
GBP/JPY trades 170.37 to 172.24 – 174.83 at the 31, 32 and 33 year monthly averages. GBP/JPY traded 174.67 and dangerously close to 174.83. GBP/JPY big line for the week is found aright around 174.64 and a 172.00 target to start. GBP/JPY begins the week overbought.

USD/JPY target at 138.16 traded to 138.45 lows from upper 140.00’s. USD/JPY supports are located every 100 pips from 140.00’s. We again target low 138.00’s for the week.

CAD/JPY achieved Richter Scale overbought status and targets 102.00’s and 101.00’s easily. USD/CAD trades deeply oversold and matches to overbought CAD/JPY. No hurry to trade USD/CAD as CAD/JPY is preferred. CAD/CHF trades fairly neutral and neutrality should allow USD/CAD to relieve oversold while CAD/JPY trades lower.

GBP/USD 1.2288, 1.2328, 1.2587. No changes to the same old GBP story. The target is the eventual break at 1.2687 then 1.2700’s again.

GBP/NZD overbought 2.0700’s traded to 2.0500 lows and next comes 2.0300’s, 2.0200 and 2.0100’s. GBP/NZD begins the week overbought at 2.0500’s.

EUR/CAD and GBP/CAD both begin the week oversold

USD/CLP Vs Copper

USD/CLP 816.45 = Copper 3.6056
USD/CLP 817.40 = 3.5973
USD/CLP 819.31 = Copper 3.5806

USD/CLP 793.60 = Copper 3.8057
USD/CLP 792.65 = Copper 3.8140
USD/CLP 790.75 = Copper 3.8307

Brian Twomey

USD/CAD and BOC Interest Probabilities

Movement (in bps)	June 2023	Sept. 2023	Dec. 2023	March 2024	June 2024	Sept. 2024	Dec. 2024	March 2025	June 2025	Sept. 2025	Dec. 2025	March 2026
	$94.830	$94.680	$94.690	$94.880	$95.160	$95.490	$95.810	$96.060	$96.240	$96.390	$96.520	$96.520
+100
+75
+50
+25	28%	88%	84%	8%
0
-25
-50					4%
-75						36%
-100							64%
-125								64%
-150									36%	96%
-175											48%	48%

Brian Twomey

AUD/USD, Interest Rates and RBA

Trading Day	No Change	Increase to 4.10%
24 May	100%	0%
25 May	97%	3%
26 May	100%	0%
29 May	97%	3%
30 May	90%	10%
31 May	78%	22%
1 June	78%	22%
2 June	63%	37%

BBSW 10 day history

DATE	1 MONTH	2 MONTH	3 MONTH	4 MONTH	5 MONTH	6 MONTH
31 MAY	3.8550	3.9250	4.0145	4.0800	4.1650	4.2150
30 MAY	3.8372	3.9064	3.9818	4.0400	4.1200	4.1700
29 MAY	3.8253	3.8900	3.9580	4.0250	4.1000	4.1550
28 MAY	3.8314	3.8799	3.9537	4.0300	4.1014	4.1673
25 MAY	3.8264	3.8728	3.9476	4.0200	4.0900	4.1450
24 MAY	3.8189	3.8700	3.9297	3.9950	4.0650	4.1328
23 MAY	3.8287	3.8700	3.9230	3.9941	4.0650	4.1293
22 MAY	3.8163	3.8457	3.9155	3.9800	4.0550	4.1100
21 MAY	3.8125	3.8600	3.9167	3.9978	4.0600	4.1093
18 MAY	3.8291	3.8587	3.9294	4.0135	4.0667	4.1175

Australia’s ASX 30 day Cash Rate Target Tracker informs a 37% chance for the RBA to raise to 4.10 as of last Friday and up from 22% on June 1 and May 31. Vital Bank Bill Swap rates dropped substantially since May 31 while OCR traded 3.85 to 3.82 since the last RBA raise to 3.85 on May 2. No indications exists for the RBA to raise.
The 30 day Cash Rate tracker informs a raise to 4.16 best shot occurs from August to December 2023 then begins a long and slow slide lower to 3.52 by November 2024.

Brian Twomey

USD/CLP Vs Copper

I see posts to Copper alone but they forgot the main ingredient as USD/CLP which runs negative Correlations to Copper and a double trade but also a reinforcement indicator to the Copper trade. Posted on site here is many USD/CLP Vs Copper Trades.

USD/CLP 841.52 V Copper 3.3053

862.81 Vs Copper 3.0924

905.40 Vs 2.66 5

USD/CLP 805.03 Targets 816.45, 817.40, 819.31

Below target 793.60, 792.65, 790.75

Copper 3.7057 Targets 3.8057, 3.8140, 3.8307

Below targets 3.6056, 3.5973, 3.5806

USD/CLP 816.45 = Copper 3.6056

USD/CLP 817.40 = 3.5973

USD/CLP 819.31 = Copper 3.5806

USD/CLP 793.60 = Copper 3.8057

USD/CLP 792.65 = Copper 3.8140

USD/CLP 790.75 = Copper 3.8307

Brian Twomey

EUR/USD V DXY, EUR/USD V USD/EUR

EUR/USD 1.0734 V DXY 103.74

1.0749 V 103.59

1.0779 V 103.29

1.0854 Vs 102.54

1.0929 Vs 101.79

1.1004 Vs 101.04

EUR/USD, DXY and markets remain in 300 ish pip ranges. Range expansion and wider trade ranges occur on breaks at 1.0779 and 103.29. The breaks won’t happen this week.

While DXY serves its purpose, the better and longer term view is seen from the EUR/USD V USD/EUR relationship particularly as EUR/USD Vs USD/EUR remain correlated at a perfect 100% as is EUR/USD and DXY.

EUR/USD 1.0840 Vs USD/EUR 0.9204

1.0909 Vs 0.9135

1.1045 Vs 0.8999

1.1386 Vs 0.8658

1.1727 Vs 0.8317

1.2068 Vs 0.7976

EUR/USD longer term view now becomes 1.0500’s to 1.1300’s or 800 pips and vital breaks at 1.1100, 1.1300’s and 1.1600’s. EUR/USD at 1.0700’s trades at the lower end to 1.0500’s and 1.1300’s. Note the longer term target at 1.1044 Vs 1.1045.

For day trades, EUR/USD is traded Vs USD/EUR and impossible not to trade as EUR/USD Vs USD/EUR. Currently, EUR/USD trades 54 pips from USD/EUR at 47 pips or on rare days, 108 Vs 94. Normally to rare days, EUR/USD 81 Max Vs 70 USD/EUR.

Compared EUR/USD at 54 Vs DXY running at current 53. This relationship runs fairly even at 54 and 53 and it won’t hold because USD/EUR runs 47 pips to DXY 53. Total 6 pips are missing . Monday after interest rate changes, the trade relationship will change for Tuesday trades and USD/EUR Vs DXY will trade correctly to fix the missing 6. EUR/USD must trade more pips than DXY for day trades and by design.

Brian Twomey

USD/JPY and JPY/USD Day Trades

As I stated many times, subscribers support this blog and purpose for writing, trades and research. Subscriber list is currently light with hope a few come on. Requirement is follow the trade script and I assure all to profits. The pen, paper and calculator is far more powerful than anything ever invented.

If subscribers fall to zero then what. Sell copies to trade systems, remain private and not post trades on FXstreet. God knows I have the best available ever invented because I took years of time to ensure I’m right and without mistakes. But systems require hedge fund money for purchase due to the massive amount of development costs. But I wouldn’t know what a hedge fund was if it hit me in the head. Those I’ve seen on social media don’t deserve any respect.

An interest rate = exchange rate and exchange rate = interest rate. Both put together is found below.

Oh BOJ informed today, USD/JPY higher for Monday.

USD/JPY

Long Short Line 138.90

Most Important 138.37 and 138.80 Vs 138.98, 139.07, 139.16, 139.25, 139.42, 139.51, 139.60

Bottom 138.20 achieves by 138.37 and 138.55

Upper Target 139.60

Continuation Fail 139.25

USD/JPY is perfect.

JPY/USD

Same concept in reverse.

Long Short Line 0.0071994

Most Important 0.00712 and 0.00719 Vs 0.0071952, 0.0071906, 0.0071813, 0.0071725, 0.0071679, 0.0071633

Bottom 0.00710 achieves by 0.00712 and 0.00719

Upper Target 0.0072988

Continuation Fail 0.0072491

Bottom = 140.84.

Upper Target = 137.00

Continuation Fail = 137.94

JPY/USD must factor by 7 numbers after the right side decimal. My system max takes 5 numbers which means JPY/USD is off. The levels for most important was converted from USD/JPY so correct.

JPY/USD works as max = 0.0000994, and 1/2 = 0.0000497. Next week, I will take the time to factor completely. Again, Pen, paper and calculator and that’s all it takes for successful trading.

Brian Twomey

FX Next Week: USD/TRY, 20 Currencies Levels and Targets

The tight relationship between oversold EUR/USD and overbought DXY remains and ensures currency and all markets will continue to hold to confined ranges. DXY at upper 104.00’s not only trades massively overbought but breaks at 102.00’s is required to trade again to 100.00’s. DXY has easy ability to break 102.00’s and trade to 100.’s over the next weeks. For next week, DXY holds at 104.00’s to 103.00’s.

Oversold EUR/USD is governed by 1.0751, 1.0863 and 1.0931. A break at 1.0931 ensures EUR/USD trades to 1.1000 and 1.1100’s. The longer term target at 1.1044 achieves quite easily. EUR/USD trades in a 1.0500 to 1.0800 range as 1.0500’s and 1.0600’s becomes oversold and overbought at 1.0800’s. The EUR/USD and DXY relationship must break wide open in order for trade ranges to expand. Without a break, markets remain settled into 200 pip ranges.

On the EUR/USD and DXY question at 1.0500’s, the vital cross is not seen nor expected. At EUR/USD 1.0500’s becomes oversold to extremes while DXY 105.00’s trades at overbought extremes. The direction for EUR/USD is higher and long strategies while short strategies for DXY and USD currencies.

An expanded and deeply detailed version to yesterday’s USD/JPY and Intervention posts is located at btwomey.com for interested. An entire series to USD/JPY and BOJ interest rates also exist and posted over the past week.

USD/JPY remains correlated to GBP/JPY at +81% and GBP/USD to GBP/JPY at +75%. This relationship has held for the past 4 and 5 weeks. USD/JPY correlates to EUR/JPY at +75% and EUR/USD to EUR/JPY at +49%.

The positive is the EUR/USD and EUR/JPY correlation breakdown is underway as the final result will materialize as USD/JPY fully correlates to JPY cross pairs. This means the USD/JPY and JPY cross pair downtrend will finally occur rather than trade months long ranges.

The market theme to extreme prices holds at it relates to GBP/NZD, EUR/NZD and GBP/AUD and EUR/AUD. As reported Sunday, EUR/AUD held at its big line at 1.6500’s and traded to 1.6300 lows. GBP/AUD broke 1.9000’s to trade 100 pips higher at 1.9100’s.

EUR/AUD for next week again holds at the vital break line at 1.6500’s while GBP/AUD trades massive overbought at 1.9100’s and targets 1.8900’s easily then 1.8700’s.
DXY forced GBP/NZD to trade overbought extremes at 2.0700’s.

GBP/NZD next week targets 2.0300’s and this is just the beginning to a 1000 pip trade to target 1.9700’s.

GBP/NZD is the dominant currency in the GBP/NZD vs EUR/NZD relationship by outperformance to EUR/NZD by at least 45 and 90 pips. GBP/NZD broke vital 2.0600’s and traded to new highs at 2.0700’s while EUR/NZD dead stopped at 1.7800’s Vs the old high at 1.8000. EUR/NZD at extreme highs at 1.7800’s lacks the power to trade 1.8000’s and became the early warning to GBP/NZD’s top at extreme 2.0700’s.

GBP/USD traded to the brink Tuesday at 1.2326. From Sunday, higher for GBP/USD with focus on 1.2489. GBP/USD traded highs at 1.2457 as of this writing. GBP/USD 1.2328 remains the vital break lower and 1.2587 to target higher to 1.2700’s. Vital for next week to target higher GBP/USD is 1.2437, 1.2468 and 1.2512. GBP/USD next week targets easily the break at 1.2468 to target 1.2490 and 1.2512.

Oversold AUD/USD targets next week 0.6627 and 0.6700’s longer term. No other choice for AUD except to long drops to target the big break at 0.6645 then 0.6700’s.

USD/JPY extremes remain at 140.90, 141.39 and 141.88. Highs achieved 140.92. The target as written Sunday at 138.17 achieved lows at 138.95. Lows next week targets 137.97. USD/JPY for the next 24 hours trades lower. Overall USD/JPY follows DXY in 100 and 200 pips ranges. DXY requires a break to see USD/JPY get going again.

NZD/USD trades extremes at 0.6014 and targets next week 0.6141 and 0.6157. CAD/JPY extremes achieve at 103.15 and 103.48 and targets easily 102.49. For USD/CAD, nothing new except overbought and short ranges. USD/JPY is the preferred trade as USD/JPY will outperform USD/CAD by many miles.

USD/TRY began in 2008 at 1.1433 and achieved highs at 21.0304 or 1900 pips in 15 years. USD/TRY trades at extremes at 20.00’s and 21.00’s. The mid point to the uptrend is located at 11.00’s and target at 18.00’s and 16.00’s is quite easy to accomplish.

Brian Twomey

USD/JPY Movements Vs BOJ Interest Rates

For every 0.001 change in BOJ interest rates, USD/JPY moves 14 and 15 pips.

For every 0.001 change in BOJ interest rates, JPY/USD moves 0.71 and 0.81 pips.

USD/JPY last week moved 276 pips Vs JPY/USD 168 pips on overall 28 point change in BOJ interest rates.

From 140.25, weekly range 141.84 and 138.69.

Trading life is much easier to factor opposite exchange rates to interest rates then refactor. For example, JPY/USD factors to USD/JPY, TRY/USD to TRY/USD, BRL/USD to USD/BRL.

PLN/EUR to EUR/PLN and the list goes on and on for any currency pair on the planet. Same for stock indices, Gold, Commodities. The object is to work with small numbers then factor to the larger market numbers.

Brian Twomey

USD/JPY and BOJ: 1 week

USD/JPY market prices trade opposite to BOJ interest rates. If BOJ lowers interest rates then USD/JPY rises. The same principle exists for JPY/USD. BOJ interest rates dropped everyday last week to force JPY/USD lower and USD/JPY higher. Comments from Ueda and BOJ members reflects USD/JPY in relation to the Japanese Call Rate.

How to balance the Call Rate in relation to USD/JPY 140.58 and JPY/USD 0.0071133. The Call Rate is the most important rate among Japanese Interest rates.

USD/JPY began last week at 137.95 and rose to 140.71 or 276 pips and closed at 140.58. How did USD/JPY rise by the BOJ interest rates. USD/JPY rose 276 pips on a drop of 28 Call Rate points or 55 pips per day and 5.6 Call Rate points.

BOJ releases interest rates at 4:00 am EST but those rates are for the next day’s trade. The Fed releases interest rates at 4:15 PM to allow immediate profits for 24 hour trades while 7 hour trades begin at 2:30 am EST by ECB standards. Don’t confuse the points as all the interest rates says the same to ranges and targets. USD/JPY 55 pips per day for example is correct but light compared to the Fed’s 70 ish pips.

Below is the BOJ and USD/JPY for last week. Viewed in a broad context but all central banks look at exchange rates in extremely wide views. The ECB for example once factored EUR/USD in 2000 pip ranges. But EUR/USD once moved 3 nd 500 pips per day pre 2016. Post 2016, the story is much different as ranges are viewed in 3 and 500 pips. Markets today are much different than pre 2016 as prices slowed to a crawl by design.

Monday May 22 USD/JPY 137.95

133.67 and 142.36

137.81 and 138.08

125.94 and 151.09

Highs 138.68, Lows 137.48

Tuesday May 23 USD/JPY 138.58

133.86 and 143.45

138.44 and 138.71

126.52 and 151.78

Highs 138.90, lows 138.23

Wednesday May 24, USD/JPY 138.57

133.44 and 143.89

138.43 and 138.70

126.51 and 151.77

Highs 139.47, Lows 138.22

Thursday May 25 USD/JPY 139.44

132.88 and 146.31

139.30 and 139.57

127.30 and 152.72

Highs 140.22, Lows 138.80

Friday May 26, USD/JPY 140.03

131.76 and 148.80

139.89 and 140.17

127.84 and 153.37

Highs 140.71, Lows 139.48

Proposed trade for Monday May 29

Monday May 29, USD/JPY 140.58

131.72 and 150.03

140.43 and 140.72

128.34 and 153.97

Brian Twomey

FX Weekly: Yield Curve and 20 Currency Pairs

As DXY rose from 100.00’s lows, supports built into the current price beginning at 103.69, 103.31, 102.73 and 101.92. Current DXY ranges from 105.73 to 103.69 and trades massive overbought. Massive overbought DXY began at 102.00’s and traveled to 104.42 highs. Severely overbought remains at 103.00’s and 102.00’s.

The DXY break below 105.00’s in March was the impetus for DXY to trade to 100.00 lows and EUR/USD to 1.1095 highs. DXY’s trajectory is not only much lower as the break higher at 105.00’s is not expected. And particularly when the DXY rise allowed overbought to USD/JPY, JPY cross pairs and wide rangers GBP/NZD, EUR/NZD, EUR/AUD and GBP/AUD.

Assume the DXY break at 105.00’s then means ranges from 105.00’s to 107.00’s then resistance points every 100 pips from 107.00 to 114.00;s. The DXY break at 105.00’s ensures overbought USD/JPY trades higher alongside JPY cross pairs and wide range currencies. The DXY break to 105.00’s ensures markets remain trading in dead range modes without relief.

DXY’s move from 102.00’s to 104.00’s was responsible for USD/JPY to break above 135.00’s and travel to 140.00 highs. USD/JPY now trades at extreme overbought particularly at 141.37. Shorts target easily 138.17 and 137.39 and much lower over time.

DXY’s rise from 102.00’s to 104.00 allowed GBP/NZD to trade 600 pips last week from 1.9700’s to 2.0400 and EUR/NZD at 600 pips from 1.7100’s to 1.7700’s. EUR/NZD will travel straight back on a DXY drop to 1.7295, 1.7274 and 1.7156 while GBP/NZD targets 1.9748 and 1.9684. Watch EUR/NZD for the break at 1.7351 and GBP/NZD at 1.9859.

What ensures the GBP/NZD and EUR/NZD targets is not only DXY but GBP/NZD at extreme overbought from 1.9500’s and EUR/NZD at 1.7000’s and 1.6900’s.

EUR/AUD is up against the same 1.6500 line and GBP/AUD at 1.9000’s. Both trade at extreme overbought and EUR/AUD targets 1.6087 while GBP/AUD requires a break at 1.8569. Good targets for GBP/AUD at 1.8700’s and 1.8600’s factors as an easier trade. EUR/AUD is the preferred currency as EUR/AUD contains easy ability to travel straight to 1.6087.

EUR/USD requires a break at 1.0770 to target 1.0872 then 1.0943. EUR/USD at 1.0770 translates to DXY breaks below at 103.69 and 103.31. The 1.0872 target factors to DXY at 102.76. EUR/USD trades in a tight relationship to DXY. The EUR/USD 1.0872 target and DXY 102.76 is not expected to trade this week.
The EUR/USD Vs DXY tight relationship must break in order for better range levels to trade or markets remain in slow price mode against dead movements.

GBP/USD trades to the brink at 1.2326 from the open at 1.2343. While GBP/USD’ s next big break is located at 1.2593, the vital line prior to 1.2593 is located at 1.2489. This line at 1.2489 is expected to hold this week to proposed GBP/USD longs.

JPY cross pairs trade extremely close to tops and extreme prices. AUD/JPY 92.59, EUR/JPY 153.94, CAD/JPY 104.47, NZD/JPY 87.02 and GBP/JPY 178.28. GBP/JPY trades from 172.00 to 174.00’s at the 33 and 34 year monthly averages. The next big line above is located at 174.95. A break below 173.29 allows GBP/JPY to target 171.00’s easily.

USD/CAD and CAD/JPY both trade at extreme overbought levels. USD/CAD is not only the problem due to small trade ranges over past months but no need to rush and trade USD/CAD. USD/JPY is much better and will profit far higher than USD/CAD.

CHF cross pairs as EUR/CHF, GBP/CHF, AUD/CHF and NZD/CHF trade severely oversold. CAD/CHF is not worthy of a trade until the USD/CAD and CAD/JPY relationship rectifies. The message from CHF cross pairs is longs to anchor currencies are well supported and DXY is miles to high.

AUD/USD and NZD/USD both trade massive oversold. Both require a lower DXY to create wider trade ranges.

Yield Curve

The 2 year and 10 inverted since March 2022 or 14 months. The entire yield curve inverted as every yield from 1 month to 30 year trades higher than the 10 year. Instead of the 10 year to serve as the top yield and remainder yields trade below, the 10 year shifted from top to bottom position..

The prior upslope yield curve from the 10 year is now a downslope yield curve beginning at the 1 month yield and ends at the 10 year. As written months ago, the 2 and 10 inversion wasn’t the story nor guarantee of recession in 6 months.

March 2022, DXY traded 96.00’s and rampaged 1800 pips to 114.00’s just 7 months later to force the bond price higher and yields lower. The ultimate safety trade to long DXY ruled for 7 months in 2022 and forced the yield curve inversion.

A lower DXY will eventually shift the 10 year back to top position.

Vital breaks next week: 1 month to 10 year

1M = 5.7640
3M = 5.3820
6M = 5.4080

1Y = 5.1645
2Y = 4.4275
3Y = 4.0970

5Y = 3.8315
7Y = 3.7935
10Y = 1.9230.

Average of the Yield curve 3.8435 at the 5 year yield. Exclude 10 year, average = 4.7788 or between the 1 and 2 year yield.

Yield Curve added 20 and 30 yield

1M = 5.7640
3M = 5.3820
6M = 5.4080

1Y = 5.1645
2Y = 4.4275
20 = 4.1220

3Y = 4.0970
30 = 3.9765
5Y = 3.8315

7Y = 3.7935
10Y = 1.9230

Average of the yield curve is now 4.3535.

Brian Twomey

Treasury Yield Curve

Vital breaks next week: 1 month to 10 year

1M = 5.7640

3M = 5.3820

6M = 5.4080

1Y = 5.1645

2Y = 4.4275

3Y = 4.0970

5Y = 3.8315

7Y = 3.7935

10Y = 1.9230.

Average of the Yield curve 3.8435 at the 5 year yield. Exclude 10 year, average = 4.7788 or between the 1 and 2 year yield. All yield rates are higher than the 10 year. Normal = All rates lower than 10 year.

10 minus 2 year = minus 2.50 and 10 minus 3 month = minus 3.45.

Brian Twomey

EUR/USD V DXY

EUR/USD 1.0753 Vs DXY 103.95

1.0768 Vs 103.80

1.0798 Vs 103.51

1.0872 Vs 1.0276

1.0947 Vs 102.02

1.1021 Vs 101.27

Brian Twomey