EUR/USD V DXY: Levels, Ranges, Targets

DXY V EUR/USD ranges for the upcoming month are explained by the DXY 1 and 2 year monthly averages at 97.12 – 92.74, a 438 pip range. EUR/USD pip ranges V DXY are found at 200, 318, 374 and maximum 418. Correlations at 98% from monthly averages 1- 10 years remain for another month elevated yet opposite 1 – 1 pip movements.

As DXY 97’s remained elusive last month, the forthcoming month reveals 97’s are out of bounds V EUR/USD. Topside and sell point levels for the month are found at 96.34, 96.32, 96.17, 95.92 and 95.33. Bottom points and out of bounds are located at 93.77, 93.70 and 93.68. A break below 93.68, targets 92.74. Most vital points are found at 95.05, 94.94, 94.69, 94.06, 93.44 and 92.84. DXY is oversold and perfectly in range at 94.58 among averages 1 – 10 years.

The vast majority of EUR/USD rises over the past 4 months from the 1.0800 lows was explained by the 2 and 7 year monthly averages. The EUR/USD price was severely out of bounds in relation to those averages. This month, the 7 year average achieved current price ranges and is no longer out of sync. Only the 2 year at 1.1628 remains and the newly developed 5 year at 1.1422. Remaining averages from 1 – 10 years are perfectly in range. Both the DXY and EUR/USD are not only in perfect ranges but this situation warns of a breakout and as well explains why the 98% Correlation remains elevated month to month.

To achieve 1.1588, points must break higher at 1.1407, 1.1422, 1.1487. However price is out of bounds and sell points are located at 1.1360 and 1.1407. Out of bounds at the bottom range is found at 1.1299, 1.1214 and 1.1193. Longer term range points are found at 1.2028, 1.2058 and 1.1972. Below bottom is found at 1.0524. EUR/USD targets are found at 1.1428, 1.1393, 1.1151, 1.1139, 1.1104, 1.1084 and 1.1027. Trading ranges overall are located from 1.1428 – 1.1027. Not only has topside ranges compressed but the bottom rose significantly to leave EUR/USD in tight ranges.

The EUR/USD bias overall is down while DXY points higher. Any rises in EUR/USD are corrections within the larger downtrend. This month isn’t likely to see 1.0524 bottoms but over time, 1.0524 and lower will achieve its objective. Over time, DXY will head far higher.

Brian Twomey, Inside the Currency Market, btwomey.com