Inside the Currency Market: EUR/USD

Draghi magic words, economic risks to the downside, open to extend QE date, open to more bond purchases, will consider interest rate drop. Dansk bank already Forecast a Refinance Rate drop in December to -0.30. One year later, was the economics of Silvio Gesell and negative interest rates the answer. So far no.

This afternoon trade, Long from 1.1121 failed at 1.1139 then reversed to break 1.1121 to 1.1079, + 48.

1.1153 and 1.1224 are big breaks above. 1.1124 descends while 1.1153 sits idle so far. EUR/USD is heading much lower, 1.0800’s look good. Note how 1.1153 and 1.1223 stand within tonight’s forecast.

EUR/USD. 1.1051. Range break above 1.1223, 1.1276, Below 1.0991. Overbought sell point 1.1153, Failure point 1.1129. Strategy. Long above 1.1108, target 1.1153 then reverse to 1.1144. Points on the way up, 1.1114, 1.1119, 1.1129, 1.1141, 1.1153.

Shorts below 1.1106, Target 1.1079. Watch here for reversal to 1.1106 and higher. Points on the way down, 1.1096, 1.1090, 1.1085, 1.1080, 1.1079, 1.1065, 1.1051 Bottom. Point 1.1079 must cross to go higher.

Brian Twomey, Inside the Currency Market, btwomey.com

Inside the Currency Market: EUR/USD

Overnight trades, 1.1360 – 1.1302, + 58 pips.

EUR/USD. Bottom 1.1066. Range break above 1.1239, 1.1006, 1.0954. Overbought sell point 1.1168, Failure point 1.1144. Strategy. Longs above 1.1123, Target 1.1162 then reverse to 1.1145. Points on the way up, 1.1124, 1.1134, 1.1144, 1.1155, 1.1168.

Shorts below 1.1121, Target 1.1093. Watch here for reversal to 1.1121 and higher. Points on the way down, 1.1117, 1.1105, 1.1100, 1.1095, 1.1080, 1.1066 Bottom. Point 1.1093 must cross to go higher.

Bigger picture, 1.1152 and 1.1226 big point breaks. Why the big drop. Remember these words, they are trying hard to drop this Euro to far lower levels. It will take time. Time came, its here. The same story remains.

Brian Twomey, Inside the Currency Market, btwomey.com

Inside the Currency Market: EUR/CAD

Normally EUR/CAD classifies as a neutral currency pair, neutral meaning its caught between EUR/USD and USD/CAD and doesn’t wander far from the center. EUR/CAD’s neutrality is seen for example in market moving economic announcements. Sometimes it moves, others times it assumes its neutral stasis position. When EUR/CAD moves and trends, its unstoppable. When its neutral, its a dead issue. It wanders and moves through its various market periods of big moves or dead stasis. Through dead periods, it serves well as a hedge.

EUR/CAD is interesting through its current period due to an 85% Correlation Vs EUR/USD and 92% Vs USD/CAD and viewed from 1 year. Part of the correlation explanation is found in EUR/USD’s 191 pip range over the past 8 days from 1.1304 to 1.1495 and USD/CAD 309 pip range over 14 days from 1.2835 – 1.3144.
The final part of the explanation is found in WTI Crude as its range is holding between 42.87 and 47.56. On a short term day by day basis from MA’s ranging between 5 – 20 days, EUR/USD, USD/CAD and crude are sharing an ongoing inverse and positive correlation Longer term, crude correlations Vs USD/CAD are clearly negative and positive V EUR/USD. Correlations inform a clearly tight market all around yet a warning as an impetus for a breakout is coming. What changes the Correlations is resolution of EUR/USD below at 1.1150 and 1.1256 and above at 1.1595. USD/CAD supports are many but the big number is found at 1.2249. What EUR/CAD is telling us is it can’t hold its present position due to an alignment problem.

From current 1.4835, EUR/CAD supports below are many and solid beginning with 1.4641, 1.4617, 1.4585 and 1.4565. Long, medium and short term, EUR/CAD is way oversold and like all EUR cross pairs has the potential to fly higher. A break of 1.4565 below targets 1.4300. Intraday, averages 5, 10 and 20 are driving EUR/CAD prices and are approaching overbought. The extremes in prices are excellent sell points and found at 1.4969, 1.4957 and 1.4928. The 50 day is found at 1.4824.

Brian Twomey, Inside the Currency Market, btwomey.com