What drives EUR/GBP is EUR/USD as Correlations factor to 91%. EUR/USD and EUR/GBP lack positive correlations to GBP/USD at minus 75% EUR/USD and negative 95% to EUR/GBP. Viewed as GBP/EUR then GBP/USD aligns as + 95% and is correct.
Not only is EUR/GBP approaching vital point breaks at 0.7784 and 0.7752 but EUR/NZD and EUR/CAD are also at important break points at EUR/CAD 1.4347 and 1.6226 EUR/NZD. EUR/GBP bottoms are located at 0.7831 and 0.7770 then next comes 0.7878, 0.7910, 0.7925 and 0.8019. Further, breaks at 0.7752 targets 0.7645. The big point breaks above are located at 0.7999 and 0.8069. The strategy is short to target 0.7645 on a break of 0.7752.
GBP/USD bottoms are found at 1.4081 and 1.4199. Then next comes 1.4265, 1.4283, 1.4367 and 1.4449. Most important break points are located at 1.4296 below and 1.4401 above. Current price is located at 1.4329 and trades in upper range. To offer context to current prices, GBP/USD trades below every yearly average since January 1999. GBP/USD trades below the 1500 day average, trades below the 16, 15, 10, 7 and 5 year averages. GBP/USD trades below the 1 year average. January 2009, GBP/USD traded 1.3499, lows not seen since 2001 and 1984 – 1986 during the Plaza Accords. Both periods 2001 and 1984 – 1986, GBP/USD experienced first ever 1.1000’s – 1.4000 lows historically dating to 1953. The strategy is GBP/USD lower, target the range lows first at 1.4199 – 1.4081.
EUR/USD. Bottoms are found at 1.1198 and 1.1138 and we begin to experience normalized prices and ranges. Next comes 1.1238, 1.1259 and range tops at 1.1320 and 1.1338. Most important long short break points are located at 1.1202 and 1.1080. Again the strategy and my own personal strategy is EUR/USD much lower over time.
Brian Twomey, Inside the Currency Market, btwomey.com
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EUR/USD. Bottom 1.1297. Ranges above 1.1563, 1.1389, Below ranges 1.1320, 1.1148, 1.0993. Targets, 1.1449, Failure point 1.1387, watch cluster area 1.1389, 1.1387, good failure point for sells. Target met at 1.1449, sell target 1.1402. target met at 1.1387, target sell 1.1371. Points on the way up, 1.1360, 1.1371, 1.1387, 1.1418, 1.1433, 1.1449.
Shorts below 1.1353, target 1.1325, 1.1311, 1.1297 bottom. Watch 1.1320 range point.
Brian Twomey, inside the Currency Market, btwomey.com
As Glenn Stevens at the April 5th RBA statement called yet again for a lower AUD/USD, the price dropped from 0.7635 to 0.7486 then in traditional AUD methodology, AUD/USD bolted to recent highs at 0.7828. Current price rests at 0.7806. AUD/CAD likewise dropped from 0.9900 highs to 0.9700 lows then typical AUD/CAD skyrocketed back to 0.9900 highs. EUR/USD sat idle and rangebound to allow AUD/USD and AUD/CAD to perform its price functions. What’s driving AUD are two factors, correlations and the complete overhaul of AUD interest rate markets.
The RBA is extraordinarily late in the revamp of interest rate markets as Europe, Singapore, Malaysia and a long list of central banks not only completed plans but are set to implement interest rate overhauls in respective markets. Overhaul includes either wholesale elimination of interest rate categories such as Europe and adjust interest rate Fixes to volume weighted averages. The Federal Reserve for example implemented volume weighted averages March 1 yet the Fed like the Bank of England lacks ability to overhaul interest rate maturities since the FED and BOE maturities are methodologically set in stone. Set in stone maturities for DXY and GBP means the market oriented character of those currencies remain while the Euro is questionable since European interest rates serve the purpose to fund bank’s market operations. What is known so far regarding AUD is the immediate switch to volume weighted averages, introduction of a risk free interest rate and current maturities remain. The market oriented character of AUD also remains which means AUD price movements prevail.
Why Glenn Stevens lacks ability to drive AUD lower is due to AUD/USD and EUR/USD revolving correlations since January. AUD skyrocketed from 0.7400 lows to 0.7800’s due to minus 98% correlations to EUR/USD. AUD/CAD followed AUD/USD because of positive correlations. Today, EUR/USD, AUD/USD and AUD/CAD are aligned as AUD/USD and EUR/USD share a + 96% correlation, AUD/USD V AUD/CAD + 74% and EUR/USD V AUD/CAD + 69%. Positive correlations means AUD/CAD retains today its traditional role as a risk barometer.
AUD/USD bottoms are found at 0.7411 and 0.7576 then next comes 0.7591, 0.7657, 0.7723 and 0.7741. Current AUD/USD price at 0.7800’s is out of bounds V EUR/USD and AUD/CAD and must fall into range. The strategy is short.
AUD/CAD bottoms are located at 0.9841 and 0.9877. Then next comes 0.9906, 0.9938 and range tops at 0.9971 and 0.9999. Current AUD/CAD price at 0.9885 trades at range tops. The strategy is short with focus on the big break long /short point at 0.9858. The larger range for a longer term view is found above at 1.0015 and 0.9547.
EUR/USD as was seen in other pairs currently trades below its range points. EUR/USD should trade inside 1.1334 – 1.1414 with focus on long/ short point at 1.1374. Despite out of sync range positions, I’m not nor haven’t favored long EUR/USD for many months EUR/USD remains in price adjustment phases from not only the previous eCB cut but past cuts dated to September 2014 when the ECB first went negative interest rates. Topside ranges in EUR/USD both in long and short term averages are compressing however slowly. EUR/USD is heading lower despite a slow, slow grind. I’m more in favor of sell rallies rather than long EUR/USD.
Brian Twomey, Inside the Currency Market, btwomey.com