EUR/USD, G10 and Interest rates

 

In Biblical days, interest was charged to foreigners but not to family or household members. Specific rules governed lend, borrow and interest charges. So began the counting system and trade between nations, specifically Greeks, Romans and Hebrews. How Arabs and Persians began the counting system is unknown. The most common number in trade and interest between nations long ago was 5. Its a biblical number as with other bible numbers and vitally important.
Today, the number 5 and multiples of 5 is a premiere number in markets. Its the foundation number to markets, 50 and 100 day MA’s for example. Any wonder a Slow Stochastic indicator is a 3 and 10 MA. In lend borrow, I give 2 and another gives back 3. Easy to count.
2000 years later, Citi Bank and Lehman currency analysts in training manuals focused heavily on currency prices and interest rates in all forms to factor a currency price. All forms means simple interest, compound, equilibrium, interest rates between nations, interest rate rises or reductions in relation to prices. To obtain an ACI Dealing certificate to deal currencies, requires a further in depth ability to know and calculate interest rates and currency prices. Now we’re dealing with Basis points, rollover rates, overnight rates, effective interest rates, time frames such as 1 year, 3 months and much more.
The dealer crowd are ones that beat currency trader / speculators by 20 to 30 pips and the speculators didn’t have a clue they were beat because they weren’t equipped with the same dealer information. Dealers and interest rate/ currency traders understand overbought / oversold, former highs and lows, support / resistance and all the rest of the market jargon in a far different light than currency speculators. The dealers are always correct as they know exactly where to take a currency price but its always in a different location than speculators.
So smart are the dealers, they don’t bother with statistics because interest rates beat Statistics by many miles in day trades. A day trade is defined as 24 hours by dealer standards. Dealers draw from the same well as me: by the central banks as the central banks hand over trades everyday. The key is to grab the easy pips offered rather than focus on the speculators hard pips.
The market is still in short term move mode by trading around 5 and 10 day averages.
EUR/USD is stuck today between its break points at 1.1241 an 1.1296. At 1.1296 becomes overbought an we’re selling back to 1.1250’s and 1.1240’s. Below 1.1241 comes next 1.1226 and 1.1212. We’re long at 1.1212 if we catch it today and trading back to 1.1241. The break of 1.1241 warns of deeper losses in days ahead as EUR began the week and remains far overbought.
The big line break below is located today at 1.1174 but its this area in days ahead to break and see EUR much lower.

NZD/USD approaches overbought and its big break point at 0.7228. AUD/USD is trapped between 0.7474 and 0.7547.

USD/JPY must break 111.51.  USD/CHF caught between 0.9522 and 0.9853.  GBP/USD 1.2745 awaits.

 

Brian Twomey

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