Fed Funds from monthly averages 1 to 10 years are overbought to the extremes while averages 10 to 20 remain in middle range.. Dot Plots are 5 year averages and revealed last year Fed Funds would trade today at 1.00% and much higher. Fed Funds trades today at its typical 0.41 and closed at 0.41 everyday since June 24th. From December to June, Fed Funds closed
from 0.37 to 0.38.
Fed Funds fails to signal a hike, short term yields fails to signal a hike and Commercial Paper rates barely signal a rise. A raise places 1 to 10 year averages into further extremes while 10 to 20 year averages begin the journey to overbought. I’m not convinced the Fed Raises nor convinced a reason exist to raise.
From yesterday afternoon’s post, EUR/USD long target was 1.0661 with a sell reverse to 1.0643. Target actual was 1.0664 and reversed to 1.0646 on the same candle. Next candle, 1.0643 and 1.0629 broke to bottom at 1.0612 and between the range from 1.0629 to 1.0601.
Previous 1.0702, 1.0716, 1.0762 and 1.0785 are today’s 1.0724, 1.0784 and skyrocket to 1.0921 and 1.0967. The way higher for EUR/USD is clear and wide open.
Higher for EUR/USD to target 1.0688 and 1.0695 must break a tough area from 1.0651 to 1.0658. Then next 1.0682, 1.0695 and 1.0709. Reverse target is 1.0670’s.
Below, EUR/USD must break tough resistance at 1.0650’s to target 1.0636, 1.0625 then 1.0608. The bottom side is contained at 1.0592 and good long point.
EUR/USD base price is built upon 1.0453 with supports above at 1.0489 and 1.0592. Overall , EUR/USD price is low and oversold with ability to fly higher. EUR/USD Futures contracts are running currently 447, 000 and higher than Draghi’s 390,000 yet just shy of Nov 9 at 467,000. Open interest is extraordinarily high. Expect much volatility today against a buy drop strategy.
Brian Twomey, Inside the Currency Market, btwomey.com