Inside the Currency Market: EUR/USD V EUR/JPY

One of the best market barometers is the view of EUR/USD V EUR/JPY because both are market leaders. Since the Yellen raise and Draghi interest rate cut, we’ve seen dull ranges because Interest rates converged rather than diverged as many write.
What is seen from EUR/USD from 1,2 and 3 year monthly averages are more continued ranges while averages 5,7 and 10 reveal EUR/USD is out of bounds. Back inside the boundary means EUR/USD must travel to 1.1300, 1.1500 and 1.1600. That’s a tall order after Draghi’s economic risks to the downside comments but its worse when EUR/USD is fighting comfort in present ranges V where the pair should trade. Now we switch to Big Sis Yellen whose balancing act is worse than Draghi.
Can Yellen defend December’s raise as justified, assure markets more raises to come, see the S&P’s higher and DXY steady. A dovish statement rocks stocks lower, EUR higher, DXY on another dip and we live with more questionable and possible raise dates later. Long ago I saw the fallacies of Fed Dot plots as Fed Governors submit 5 year averages so personally never trusted the latest Plot data. Its not the way to view interest rates. Dot Plots to be accurate should be viewed in at least 15 – 20 year terms.

EUR/JPY. 1,2 and 3 year averages are fine in EUR/JPY price terms but at bottoms at 127.93, 127.83, 128.64, 129.84. Averages 5, 7 and 10 are middle range and in no threat of range breaks for a long, long time in the future. Any EUR/JPY rises are corrections. What is concerning is Correlations are 76% and 66% at 1 and 2 year averages while negative at 5 and 7. Averages 3 and 10 are nill at 20% and 25%. What is concerning is EUR/JPY may be in transformation mode to switch back fully to USD/JPY. That means again USD ascendancy seen since the 2008 crisis is still the market norm. It means EUR/USD rises are correction and USD/JPY longs is the way. But it may also mean EUR/JPY may continue its range bound ways.

EUR/USD. Bottoms from 1, 2 and 3 year averages are found at 1.0799, 1.0768, 1.0749, 1.0728, 1.0699, 1.0688. For day traders, long down in these areas. But 1.0912 and 1.0923 are falling daily on current prices.

EUR/USD V EUR/JPY, means, high and low ranges offered. From EUR/USD 1.0812.

1 year mean 130.84, range above 133.03, below 128.64.
2 year mean 133.46, range above 136.96, below 129.95
3 year mean 133.33, range above 138.82, below 127.83
5 year mean 130.84, range above 145.55, below 116.12
7 year mean 126.65, range above 140.35, below 112.94
10 year mean 121.56, range above 139.90, below 103.21

EUR/USD V EUR/JPY, means, high and low ranges offered, From EUR/USD 1.0912

1 year mean 132.04, range above 134.23, below 129.84
2 year mean 133.72, range above 137.22, below 130.21
3 year mean 133.43, range above 138.92, below 127.93
5 year mean 130.50, range above 145.21, below 115.78
7 year mean 126.52, range above 140.22, below 112.81
10 year mean 122.00, range above 140.34, below 103.68

EUR/JPY V EUR/USD, means, high and low ranges offered, from EUR/JPY 129.50

1 year mean 1.0940, range above 1.1081, below 1.0799
2 year mean 1.0576, range above 1.1476, below 0.9676
3 year mean 1.1896, range above 1.3024, below 1.0768
5 year mean 1.2377, range above 1.3417, below 1.1337
7 year mean 1.2710, range above 1.3745, below 1.1671
10 year mean 1.2606, range above 1.3665, below 1.1547

EUR/JPY V EUR/USD, means, high and low ranges offered, From EUR/JPY 128.50

1 year mean 1.0890, range above 1.1031, below 1.0749
2 year mean 1.0406, range above 1.1306, below 0.9506
3 year mean 1.1856, range above 1.2984, below 1.0728
5 year mean 1.2397, range above 1.3437, below 1.1357
7 year mean 1.2720, range above 1.3759, below 1.1681
10 year mean 1.2596, range above 1.3655, below 1.1537

EUR/JPY V EUR/USD, means, high and low ranges offered, From EUR/JPY 127.50

1 year mean 1.0840, range above 1.0981, below 1.0699
2 year mean 1.0236, range above 1.1136, below 0.9336
3 year mean 1.1816, range above 1.2944, below 1.0688
5 year mean 1.2417, range above 1.3417, below 1.1377
7 year mean 1.2730, range above 1.3769, below 1.1691
10 year mean 1.2586, range above 1.3645, below 1.1527

Brian Twomey, Inside the Currency Market, btwomey.com, contact anytime,

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s