Bottoms for EUR/USD upon Fed Funds announcement were located at 1.0597, 1.0534, 1.0495, 1.0485 and the base at 1.0429. EUR/USD stopped at 1.0498. Top was located at 1.0750 and 1.0820.
Today’s bottoms are located at 1.0473, 1.0447, 1.0386, 1.0346, 1.0337, and new base at 1.0250. Price stopped at 1.0366.
Current Bottoms. 1.0363, 1.0337, 1.0274, 1.0236, 1.0226 and base at 1.0156. EUR/USD current price is ongoing but bottom stopped at 1.0406.
Future bottoms. 1.0070, 1.0038, 0.9910, 0.9859, 0.8612, 0.7814, 0.7346.
AUD/USD. Fed Day bottoms: 0.7422, 0.7407, 0.7378 and 0.7322. Price dead stopped at 0.7395. Future bottoms. 0.7167, 0.6929, 0.6779, 0.6636, 0.6453, and 0.6260.
What is not known is overbought V oversold because Central banks don’t understand such aspects to their exchange rates. They understand low or high and levels. They have ability to drive prices to certain levels. Bottoms are known because central banks view their exchange rates in thousands of points. Conversely, tops are known as well.
Because bottoms and tops are known doesn’t mean the Exchange rate reaches those destinations. Yet central banks must view exchange rates in thousands of points to not only know current and future exchange rate locations but investors, major companies and exporters doing business across borders must factor exchange rates years in the future for profit purposes. The full trade information is known, the trader based on their own evaluations enters the trades.
When GBP/USD dropped 3000 points or EUR/CHF 3500, why didn’t the BOE or SNB intervene. When the ECB began negative interest rates in Sept 2014, EUR/USD dropped so far 3000 points. Any word from the central banks, nada.
Written for Goncalo Moreira at fxstreet because his interesting views on exchange rates.
Brian Twomey, Inside the Currency Market, btwomey.com