EUR/USD: Levels, Ranges, Targets

Draghi on hold is the result to alternatives to CHF, GBP, DKK and SEK as those interest rates trade below European rates and are literally on the floor near zero. Negative interest rates contain bottoms at zero.
Added is non negative interest rate nation GBP. Anymore Draghi cuts will force the BOE to move.
Further, the entire Draghi story in interest rate cuts is not about economics at this stage, its systemic as two years later into negative, the cuts haven’t produced any promises and the ECB is rolling out huge changes July 1. Now is not the time for Draghi to move interest rates further.

The interest rate game these days by central banks is compress not expand the channels between and among nations. To understand how this plan operates, I constructed a 10 nation, 9 year interest rate index and published results, findings, explantions, and the way forward in trades. The overall plan is garner control over M1, the exchange rate and severely limit volatility. On NFP day for example, today’s EUR/USD pip range is 49 pips and down about 7 pips from yesterday’s range. Central bank policies today are in uncharted territory, never before seen and far from the tradition.

EUR/USD Bottom today, 1.1099, note monthly average 1.1090 contains big break. For NFP trade, any price below 1.1099 look for longs. Price achieves 1.1099 by breaks at targets 1.1127, 1.1113, 1.1108 then bottoms 1.1099. A break of 1.1090 is not expected but next 1.1084, 1.1044, 1.0988. Any price below 1.1099 becomes oversold.

Big break points above today, 1.1164, 1.1173, 1.1221, 1.1223, 1.1292. Monthly average break 1.1552. Above 1.1292 is not expected but next big break points exist at 1.1372, 1.1382. Both points perfectly in line against Forward trend lines, today at 1.1381.

Upper targets, 1.1168, 1.1188, 1.1212. The NFP trade is any price above 1.1212, begin to look for shorts. Above 1.1212, comes next 1.1225, 1.1239, 1.1252. All this not expected today as 1.1221 and 1.1223 presents tough resistance and must break to see higher over coming days.

Monthly averages found 1.1090 to 1.1552, current price is oversold on the day and at bottom of the range.

Brian Twomey, Inside the Currency Market,

EUR/USD V DXY: Monthly Forecast

EUR/USD V DXY: Monthly Forecast

DXY and EUR/USD prices are again explained since December 2015 and every month thereafter by 1 and 2 year monthly averages. The commonalities to both DXY and EUR/USD averages
since December are severely oversold and despite solidly negative correlations in the upper 90’s.

Secondly, as DXY and EUR/USD prices traded within its averages since December, price pressures every month are severely building to the point we see not a trend but a massive breakout. This month is no different, only worse. The first warning is upper 90’s correlations can’t remain forever. Both DXY and EUR/USD await the impetus to make the big move yet without the catalyst, DXY and EUR/USD remain range bound. What I see this month is more of the same ranges and its DXY causing EUR/USD and all currency pair’s price move problems.

The DXY 290 pip June range is found from 96.87 to 93.97. To understand 290, January’s 489 pip range was located from 100.27 to 95.38 while February ranges expanded to 599 pips from 97.53 to 91.54. February’s bottom dropped. March’s Fed statement stated a lower DXY was ahead from its then current price at 96.17 as the Yellen plan is lower DXY, lower WTI and higher equity prices to raise CPI. The problem with the WTI aspect is prices in the 30’s and 40’s before the Saudi’s allowed the price fall haven’t been seen holding nor a close basis since 2005 / 2004.

May saw a 438 pip range from 97.12 ­ 92.74. DXY at 290 is just under half of February’s range and the current range is located at its lowest interval since December. DXY is the currency to
direct the breakout.

The 290 pip range means 98.32 V 92.52 and EUR/USD 1.1490 V 1.0910. DXY 96.87 is not only strong and powerful but the best seen on a break is 97.74 and 97.64. DXY attains 97’s by breaks and hold at 95.42 then 95.53, 95.85, 96.00, 96.06, 96.48, 96.64, 96.87 average, then on to 97.04, 97.09, 97.13, 97.33, 97.64 and 97.74. Without the impetus, don’t look for 96.87 to break.

DXY bottoms are held by 95.53, 95.36, 95.32, 95.23, 94.77, 94.65, 94.43 and 94.01. The big DXY bottoms are 93.98 and the average break at 93.97 then on to 93.31, 93.07. At Bottoms, EUR/USD still doesn’t break 1.1552.

EUR/USD despite big break point at 1.1090, solid bottoms exist at first 1.0989, 1.0927, 1.0874, 1.0872, 1.0869, 1.0836 and 1.0820. Then EUR/USD heads to 1.0755’s. EUR/USD breaks
1.1090 by 1.1146, 1.1136, 1.1108. Then break 1.1090 targets next 1.1045, 1.1038, then begins 1.0989 and the series from above.

Higher for EUR/USD and sell points are found at 1.1223, 1.1255, 1.1259, 1.1268, 1.1304, 1.1324, 1.1346. Big break is found at 1.1372. EUR/USD achieves 1.1552 by further breaks at 1.1466, 1.1478, 1.1539.

Overall EUR/USD range 1.1090 to 1.1372 and DXY 96.87 to 93.97.

For the month, DXY and EUR/USD are looking at about 200 pip ranges. Big break outs above are not expected but rather more range trading is the order of the month. What ranges reveal possibly is Yellen fails to raise in June with promises towards July. In my estimation, Yellen lacks an adequate justification, a reason, a purpose to raise.

Brian Twomey, Inside the Currency Market,