EUR and 27 CURRENCY PAIRS VS EQUILIBRIUM

In the 3rd Bi annual review of our currency pairs Vs Equilibrium and Vs the major pair alignments against each other, the view of the major pairs was expanded to include 27 pairs. CHF for example as CHF/ Other Currency was viewed Vs 27 counterpart pairs. The full view of Majors Vs 27 counterparts total about 196 + currency pairs, about because ILS, Israeli Shekel was thrown in the mix as well as NOK/SEK and other pairs important to the world and currency markets.
The previous view of Major Pairs Vs each other included about 130 pairs. Its a view that determines currency pair alignments not only Vs each other but those relationships are known Vs Equilibrium. The purpose for this methodology is to understand what types of markets trade, alignments Vs Realignments, which pairs are anomalies, which pairs fit the matrix. Any aberrations in currency pair locations and positions are then bought and sold.
Equilibrium is Central Bank speak and intimates various interpretations from central bank to central.bank. In the broader context, its defined as neutral zones and an important location for currency pairs because many belong to this category A few examples.
GBP/CAD 1 year and 6 months ago was in the neutral zone, today it remains in the neutral zone. GBP/CHF 1 year and 6 months ago was in the neutral zone, today its position is far below Neutral zones. GBP/JPY bounced twice from the neutral zone 1 year and 6 months ago and is on the verge to graduate to neutral again. USD/KRW just graduated to Neutral from below for the past 1 year and 6 month review. EUR/CAD remains in neutral zone in all 3 reviews, 1 1/2 years and running. GBP/AUD remains in the neutral zone 1 year and running while EUR/AUD graduated to neutral from its position on the floor 1 year ago. GBP/NZD graduated to neutral from its position on the floor 1 year ago. NOK/JPY remains in the neutral zone 1 year running while USD/CZK graduated to above its neutral zone. GBP/SEK remains neutral 1 year running. In the new review, AUD/CAD graduated to neutral as well as EUR/GBP, NZD/USD and USD/HKD.
The expanded view reveals for example all 27 pairs as CHF/ Other Currency including CHF/USD is above the neutral zone. CHF/CNY is the only pair below. Every CHF pair is bought today as possibly a means to offset EUR in the Swiss balance sheet. A speculation.
All 27 USD pairs are above neutral zones except USD/CHF. USD/ILS is above. For JPY pairs, 16 are below Neutral zones, 3 above and 7 in Neutral. Following is the list above, below and Neutral for 199 currency pairs.
EUR. Above Neutral: EUR/HUF, EUR/IDR, EUR/BRL, EUR/NOK, EUR/PHP, EUR/PLN, EUR/RUB, EUR/SEK, EUR/TRY, EUR/ZAR, EUR/JPY,
Neutral: EUR/CAD, EUR/AUD, EUR/GBP, EUR/CZK, EUR/DKK, EUR/INR
Below: EUR/USD, EUR/CNY, EUR/HKD, EUR/KRW, EUR/MXN, EUR/SGD, EUR/THB, EUR/PHP, EUR/NZD, EUR/CHF.
GBP. Above Neutral: GBP/RUB, GBP/BRL, GBP/NOK, GBP/HUF, GBP/IDR, GBP/INR, GBP/PHP, GBP/PLN, GBP/TRY, GBP/ZAR, GBP/JPY, GBP/MXN,
Neutral: GBP/CAD, GBP/AUD, GBP/NZD, GBP/CZK, GBP/DKK, GBP/SEK, GBP/THB,
Below: GBP/USD, GBP/PHP, GBP/CNY, GBP/HKD, GBP/SGD, GBP/KRW, GBP/CHF.
JPY. Above: JPY/ZAR, JPY/BRL, JPY/RUB,
Neutral: JPY/AUD, JPY/CZK, JPY/HUF, JPY/IDR, JPY/NOK, JPY/PLN, JPY/TRY,
Below: JPY/CNY, JPY/CAD, JPY/CHF, JPY/DKK, JPY/EUR, JPY/GBP, JPY/HKD, JPY/INR, JPY/KRW, JPY/MXN, JPY/SEK, JPY/NZD, JPY/PHP, JPY/SGD, JPY/THB, JPY/USD.
CHF: Above: CHF/KRW, CHF/NOK, CHF/PHP, CHF/RUB, CHF/SGD, CHF/TRY, CHF/ZAR, CHF/USD, CHF/MXN, CHF/NZD, CHF/PLN, CHF/SEK, CHF/THB, CHF/DKK, CHF/AUD, CHF/BRL, CHF/CAD, CHF/CZK, CHF/EUR, CHF/GBP, CHF/HKD, CHF/HUF, CHF/IDR, CHF/INR,
Neutral: Zero
Below: CHF/CNY
AUD. Above: AUD/BRL, AUD/CZK, AUD/HUF, AUD/IDR, AUD/NOK, AUD/RUB, AUD/TRY, AUD/ZAR,
Neutral: AUD/SEK, AUD/DKK, AUD/PLN, AUD/CAD
Below: AUD/USD, AUD/CNY, AUD/HKD, AUD/INR, AUD/KRW, AUD/MXN, AUD/PHP, AUD/SGD, AUD/THB, AUD/NZD.
NZD. Above: NZD/RUB, NZD/PLN, NZD/BRL, NZD/DKK, NZD/EUR, NZD/HUF, NZD/IDR, NZD/INR, NZD/ZAR, NZD/SEK, NZD/NOK,
Neutral: NZD/USD, NZD/GBP, NZD/HKD, NZD/KRW,
Below: NZD/PHP, NZD/CNY, NZD/CZK, NZD/THB, NZD/CAD, NZD/CHF, NZD/SGD,
CAD: Above: CAD/RUB, CAD/TRY, CAD/BRL, CAD/CZK, CAD/NOK, CAD/IDR, CAD/INR, CAD/NZD, CAD/ZAR
Neutral: CAD/SEK, CAD/DKK, CAD/PLN,
Below: CAD/HUF, CAD/HKD, CAD/AUD, CAD/CNY, CAD/KRW, CAD/MXN, CAD/PHP, CAD/SGD, CAD/THB, CAD/CHF,
Below: NOK/SEK, SEK/CNY, NOK/CNY, USD/CNY
Brian Twomey, Inside the Currency Market, btwomey.com

Advertisements

INSIDE THE CURRENCY MARLET: EUR/USD, USD/JPY, EUR/JPY, YEN Crosses

Inside the Currency Market: EUR/USD,USD/JPY, Yen Cross Transitions

To understand the EUR/USD, USD/JPY and EUR/JPY relationship is not to view EUR/USD and USD/JPY alone since what we see is a very tight relationship and this alignment is forcing short ranges. Viewed longer term, EUR/USD and USD/JPY hardly share a relationship, it exists literally without a pulse. Reason for this is USD/JPY lies literally a few pips below the EUR/USD line and EUR/JPY lies just a few pips above the EUR/USD line.
The problem relationship in this trifecta is USD/JPY is light years overbought Vs EUR/JPY and EUR/USD is oversold vs EUR/JPY. Worse, EUR/USD is overbought vs USD/JPY.
EUR/JPY Vs USD/JPY must be viewed to understand EUR/JPY is the problem pair that is holding up further price movements in USD/JPY and EUR/USD. Current EUR/JPY and USD/JPY prices are at their greatest points in the last 6 1/2 years.
EUR/JPY just broke vital 132.63 and places EUR/JPY in neutrality between 132.63 – 130.16. EUR/JPY doesn’t know exactly where to go so short ranges between EUR/USD and USD/JPY are forcing its location to neutrality.
Viewed from further JPY crosses, CAD/JPY from current 92.20 must break 92.09 to see neutrality between 92.09 – 88.98. GBP/JPY must break 175.39 to see neutrality between 175.39 – 170.37.
The major pairs are late to the JPY neutrality game. The following are in neutral arranged as IDR/JPY, NOK/JPY, PLN, SEK, TRY, ZAR, CZK. Even Denmark earned neutrality and HUF/JPY and BRL are only 100 pips away.
Prices and pairs are formally Realigning but it appears transitions must occur to neutrality first.
EUR/USD. The bottom as viewed from USD/CHF previously and now confirmed by USD/JPY and EUR/JPY remains at 1.10. This point is a big break if EUR/USD plans travels down further.
Breaks below: 1.1206, 1.1172, 1.1140, 1.10. Above: 1.1312, 1.1353, 1.1372. EUR/USD is currently severely oversold.
USD/JPY Big point break below 115.54 and 115.86. USD/JPY longs are not terrible. Its shorter term that’s a bit overbought but longer term, USD/JPY has easy potential to go higher.
Levels Below: 117.36 and 117.32 are very important points, breaks lower would see deeper correction to next 116.29, 115.86, 115.54.
Above : 117.72, 117.87, 118.23, 118.44, 119.10, 119.44, 119.52, 120.09.

EUR/JPY. The impetus for current move to 132 was the break at 137.62 and 137.95. Both are big lines and must hold any further EUR/JPY shorts. USD/JPY will be responsible to drive further EUR/JPY prices. In order for EUR/USD to again own this pair fully may take a break of 1.10 or possibly USD/JPY 120.09. EUR/JPY is expected to see a big move as all EUR/USD crosses.
Levels Above: 132.63, 132.78, 132.81, 133.65, 134.31
Below: 131.69, 131.32, 130.05
More pairs, trades, Info posted here throughout week
Brian Twomey, Inside the Currency Market, btwomey.com