Inside the Currency Market: DXY

The vast majority of financial trading activity in the United States takes place at the 6 month yield. At the 6 month Yield is found 1 month Eurodollars, US Treasury Repo rates and 1 month Financial Commercial paper. 3 month Eurodollars are found at the 1 year yield. 6 month Eurodollars trades between 1 and 2 year yields. Libor trades between 3 and 6 month yields. Stock Markets, yep 3 and 6 month yields. 1 month Eurodollar spreads to Libor is 0.0565. Eurodollars are deposits overseas. Libor is money borrowed, lent and traded in London. Commercial paper is money borrowed unsecured for overnight to 270 days. Why 270, then it doesn’t have to report to the SEC. What I described is the DXY, how its viewed, traded and forecast. Those analysts showing these 10 year yield charts for the DXY, well what can I say. They add to the 90% of information written that is worthless and non trade able.

Fed Funds closed Friday at 0.14, not 0.15. Those closes places the DXY larger range between 105.41 – 87.68 and 104.50 – 88.45. The DXY closed Friday at 96.15.

DXY. Bottom. 95.66. Range above 96.69, Below 95.59. Overbought sell point 96.42, 96.47, 96.54. Overall 96.42 -96.54. Strategy. Long above 96.14, Target 96.42 then reverse short to 96.28. Points on the way up, 96.14, 96.17, 96.23, 96.42.

Shorts below 96.14, Target 95.90. Watch for reversal long here to 96.14. Break of 95.90 then next 95.88. Points on the way down, 96.09, 95.94, 95.91, 95.88, 95.66 Bottom.

Brian Twomey, Inside the Currency Market, btwomey.com

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