Months ago, the EUR/USD V USD/JPY relationship was clear and uniform. Then 126 was a clear top in all averages and 120.00 – 121.00 a discernible sell point. Today,the averages are non uniform. The 1 year average has 0 slope but a EUR/USD bottom at 1.0893 while the EUR/USD leaves its range in the 3 and 5 year averages below 1.1013 and 1.1058. In the 7 and 10 year averages, EUR/USD enters its range at 1.1300 and 1.1513. On the USD/JPY side, the USD/JPY previous top from 126 is now solid across all averages at 124.00 but look to 117.00 0 119.00 as must breaks before consideration of 124 down the road. USD/JPY is outside its boundaries in the 1, 2 and 3 year averages and should be at 118.33, 117.54, and 115.81. Bottoms in the 5, 7 and 10 year averages are located at 104.94, 102.75 and 96.72. Average lines are located at 116.45, 113.60 and 110.70.
EUR/USD and USD/JPY are both fighting dominance to go higher but opposite correlations won’t allow it. Might be this week’s data that decides. USD/JPY is much more oversold than EUR/USD so USD/JPY longs for the week.
From current 112.52, bottom points are found at 110.69, 109.59 and overall tops at 117.68 and 117.86. The best range is found from 109.59 and 110.69 – 114.60. I like the target so far at 114.43 but first 113.60 must break. If 114.60 breaks then next target becomes 116.45 I’m comfortable with USD/JPY longs but not sufficiently comfortable with targets so we monitor this trade over the week.
EUR/USD. Tops in EUR/USD are found at 1.1300, 1.1359 and 1.1435, 1.1513 and 1.1595. Rough area between 1.1300 – 1.1595 and must breaks to see 1.1800’s. On the downside, 1.1123, 1.1059 then longer term 1.0886. Most important point 1.1059 is an imperative break to see EUR/USD lower. Upon a 1.1059 break then next targets become 1.0953, 1.0906 then on to 1.0886. Watch 1.1059, if it holds then short term traders can head long to range between 1.1059 – 1.1123. Overall from my daily data, EUR/USD is at a top and is heading lower.
Brian Twomey, Inside the Currency Market, btwomey.com