EUR/USD V DXY: July Monthly Forecasts

Since November and every month thereafter, EUR/USD and DXY is explained by the 1 and 2 year monthly averages. DXY in June ranged 290 pips from important break points at 96.87 to 93.97 while this month the DXY range restricts to 221 pips from vital monthly average break points at 96.80 to 94.59. EUR/USD last month contained a range at 462 pips from 1.1552 to 1.1090. For July, the range compresses to 348 pips from vital monthly average breaks at 1.1454 to 1.1106.

EUR/USD from 1.1106 as a 348 range places EUR/USD at 1.1454 and below at 1.0758. Problem with 1.0758 is a big bottom exists at 1.0868 then a confluence of supports at 1.0789, 1.0764 and 1.0745. Vital breaks for the month below are located at 1.1083 and 1.1012. Recall last month’s 1.1090 at the one year average is now 1.1083 as support, a 7 pip drop and rise to 1.1106 and a 16 pip rise. 1.1106 and 1.1083 will serve as tough supports moving forward and must breaks for any downsides.

For the upside, big breaks lie just ahead of the 1.1134 close at 1.1143, 1.1154, 1.1182, 1.1184 and 1.1198. Then comes 1.1279 and 1.1311, 1.1365, 1.1377, 1.1380 and 1.1411. Most important breaks overall 1.1154 and 1.1279, both are dropping by the day.

While 348 maybe range pips based on averages, actual pip ranges are located at 205 and 224 and places the range from 224 and 1.1106 at 1.1330 and 1.0882. Viewed from 1.1444, 1.1230 and 1.1279 would become a confluence of vital breaks and must crack to go higher.

From a 1 and 2 year trend line perspective in a longer term view, EUR/USD bottoms are found at 1.0648 and 1.0346 and 1.0306 while tops are located at 1.1600’s and 1.1700’s. Why range restrictions and short term views that lack trend over 7 months is due from EUR/USD trades far above the 1 year line and far below the 2 year. Upper average trend line prices cluster directly on the line alongside DXY and awaits impetus for a sure directional trend. Currently none exists and its DXY and Yellen holding progress.

While DXY 221 ranges exist from averages from 96.80 to 94.59, actual ranges are found from 305, 311 and 329 pips. Consistent with the range anomaly is tops are found in DXY from 98.39, 98.33, 98.15, 98.00, 97.91, 97.86, 97.79, 97.25 and 97.11. For DXY to see a break at 96.80 and upper decks to 98.00’s, EUR/USD must travel to 1.0800’s and 1.0800.

From the 95.72 close, next above points exist at 96.05, 96.34, 96.67, 96.70 , 95.95 then break at 96.80. Below points are located at 95.59, 95.48, 95.34, 95.27, 94.62, 94.60, 94.28 then 93.76. On a break of 94.59 then next comes 93.76 and 93.74. In a longer term view, DXY overall bottoms are found at 92.67, 92.08 and 91.98.

The EUR/USD path of least resistance is short on breaks of 1.1106 and hold at descending 1.1154 and 1.1279.

Brian Twomey, Inside the Currency Market, btwomey.com, brian@btwomey.com

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