EUR/USD V CAD/ZAR, Transition: levels, Ranges, Targets

CAD/ZAR V EUR/USD currently trade at extreme wide distances to each other and this view from every month in 2017, 2016 and 2015. CAD/ZAR is far to low while EUR/USD is far to high. Why view CAD/ZAR is because its a USD pair and it serves as the most revealing currency pair to define overall currency market relationships and because Correlations to EUR/USD always trade at far extreme opposites. In the 2008 and 2009 crash period, CAD/ZAR traded far to high Vs EUR/USD at far low levels. Both traded to far extremes. While CAD/ZAR traded at 21.00’s, EUR/USD traded to 1.0300’s. EUR/USD today at 1.1900’s and CAD/ZAR at 9.7800’s revealed CAD/ZAR crossed below EUR/USD over the last years.

Viewed from 2014, CAD/ZAR and EUR/USD are married at the hip which means overall currency markets trade at their defining moment. Last post addressed currency market transition currently as viewed from EUR and G10 currency pairs.
The 2014 CAD/ZAR Vs EUR/USD defining moment further reinforces an enormous change inside currency prices as the next currency market period is upon us. Informed for the 2014 CAD/ZAR Vs EUR/USD relationship is the possible cross.

If EUR/USD crosses above CAD/ZAR then EUR/USD not only travels far higher but EUR/USD longs and buy drop strategies will survive through 2018 and most likely far into 2019. This means, USD heads miles lower into 2018 and 2019. A formal cross is mandatory because currency pairs in cross situations contain tendencies to bounce rather than cross. Currency market transitions and new periods while revealing for positioning don’t come easily. Sometimes it takes a few bounces and time before an actual cross. But an actual cross solidifies whether EUR or USD will be dominant and dominant means years not months.

As to overall currency market health, EUR/USD, EUR/JPY and USD/JPY trade at correct positions to each other in relation to 2016, 2015 and 2014. A healthy currency market reveals wild volatility lacks order of the day. The transition means just as the word implies, smooth currency prices to enter the new period will be seen. If EUR/USD, EUR/JPY and USD/JPY traded in unhealthy situations to each other then the transition would be extremely volatile.

The most important pair to watch in the mix is EUR/USD because of its lead tendencies to all currency pairs. The second pair is EUR/JPY because it always offers best movements as it transitions to its proper location to align formally to either USD/JPY or EUR/USD.

Short term, CAD/ZAR and EUR/USD extremes informs EUR/USD is in dire need of a healthy correction and USD higher. Higher for CAD/ZAR at current 9.78 means 1st the 5 year average at 10.10 then 10.33 and 10.78. EUR/USD at 1.2005 is on top of its 5 year average. EUR/USD’s big break below is located at 1.1780. Variation in CAD/ZAR reached extremes short term and set for a big bounce.

EUR/USD Break points 1.2005, 1.1799 and 1.1780.
AUD/USD 0.7743, 0.7841 and 0.7939.
USD/JPY. 112.57 and 112.52.
EUR/JPY 132.76 and 132.61.
NZD/USD. 0.7039 and 0.7132.

 

Brian Twomey

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EUR, Tax Cuts, UN: Levels, Ranges, Targets

An historic day since WW 2 is upon us in 2 respects. Trump’s required sledgehammer effect to stop the Democrats was delivered and finessed by law through tax cuts for every state except the Democrat Blue States.

Democrat governors and legislatures in Blue states must either cut taxes or Blue states fall into further economic ruin. The forward brilliance to this move cannot be understated as Trump is the 1st President since the 1920’s to ever confront and stop the Democrats. If Democrats refuse to cut taxes in Blue states then a mass exodus will be seen from citizens and companies. Blue states contain the potential to revert to Red States over a short time. The next move is in Democrat hands.

What a great day and win for America. In 30 years as a student and Poly Sci professor, I never thought I would see this day. The political word Bi Partisan lacked meaning in word and deed in American Politics because Democrats never played the policy game fairly . Further question is will Trump tax cuts force Democrats to the table to address issues or will the Democrat Party’s unyielding obstinence see the Democrat party fall into further obscurity.

The second historic event is cut the UN budget as the United Nations since WW2 creation never worked and became an anti American organization especially in the Security Council.

From the Cold War to current day, Russia and American vetoes against each other stopped the Security Council’s policy progression to move forward. The Security Council was locked in place. The General Assembly where most nations reside always was an anti American arm of the UN. Few commentators recommend voluntary contributions rather than assessed. Why the League of Nations no longer exists is because voluntary contributions was the order of the day from WW 1 to WW2 and nations refused to contribute so the League failed and the UN was formed against assessed contributions. Another Great and historic day for America and day I thought I would never see in my lifetime.

Break Points

EUR/USD. Break Points 1.1771 and 1.1801 Vs 1.2006. At 1.2006 resides the 5 year average. A break then EUR travels farhigher and enters a new day.

AUD/USD. Break Points 0.7747 and 0.7700. Currently overbought.

NZD/USD. Break Points 0.7030 and 0.7027. I warned last post regarding NZD and AUD.
GBP/JPY. 149.56 Vs 153.30.

USD/JPY. 112.57 and 112.47. Both break then Watch EUR break 1.2006 and again a new day is upon us as EUR goes higher and JPY lower.

 

Brian Twomey

EUR, G10, Currency Market Transition: Levels, Ranges, Targets

While EUR/USD and USD/JPY prices remain deeply intertwined, USD/JPY’s current price is the problem pair in this relationship because of confirmation USD and JPY are married as well. This explains why the current price pressures are seen in USD/JPY but not in EUR, USD/CHF or USD/CAD. But most vital overall past, present and future is USD/JPY as the driving pair in universal currency market relationships from the USD side. The why aspect is because of Japan’s economic relationships in Europe and the US as well as the import to EUR/JPY. Rarely are USD/CHF and USD/CAD leading the USD way.

From an interest rate perspective, EUR/USD price is miles to high while USD as the opposite pair, its price is miles to low. USD/JPY is stuck in between and trying to find its way. For context, European interest rates trade at levels seen from the 2008 to 2009 drop at 2500 pips while USD/JPY and DXY interest rates trade at levels seen in 103 DXY and 124 USD/JPY. The USD/JPY and EUR/USD tight relationship warns a massive, massive breakout is upon us. Not only is a massivebreakout upon us, it will be seen. The current numbers cannot hold. How long before breakout means data must run against the lines.
Europe’s problem is the ECB contained its interest rates far to long. Add QE in the mix then the exchange rate becomes misplaced and trades at incorrect levels. USD and the FED however are most off kilter as Fed Funds is miles overbought and it explains why daily interest rates trade on the floor. QE offered over 9 years, massively misplaced interest and exchange rates as alignments are far out of whack both inside each nation and relationships between nations. Market prices became creatures of reaction rather than stand on solid comfortable ground.

From an overall currency market perspective, AUD, NZD and GBP are currency pairs subject to the direction of EUR, USD and JPY. AUD is clearly most affected as AUD/USD and Australia interest rates are most misaligned, followed next by NZD then GBP. AUD most especially is subject to a massive move followed by NZD and to a lesser degree, GBP. The BOE’s decision to raise Bank Rate was smart yet forced on the BOE. GBP’s price is low yet not in terrible shape as it now bounces between its proper location, between USD and Europe.

What is seen overall is currency markets are in transition and EUR is the only pair to complete its mission. Markets still await USD/JPY, AUD, NZD and GBP. Until the transition completes, markets will continue ranges. When transition completes for all pairs and we are extremely close then a giant breakout will be seen.

Further to transition is Jan 2018 marks year 46 since the free float. Market transitions may signify the new period is upon us and aligning for the future. How long at this stage is questioned until data is further reviewed.

EUR/USD break points 1.1746, 1.1803 and 1.2008 at the 5 year average. Watch today 1.1885.

USD/JPY break supports overall at 112.52 and 112.20. Watch today 113.53.

NZD/USD most revealing pair as resistance lies at 0.7016 and 0.7037. Above 0.7037, resistance points far higher and many in 200 pip increments.

AUD/USD overall 0.7678 and 0.7758. Resistance points view the same as NZD as levels range in about 200 pip increments.
Brian Twomey

EUR, G10 and Tax Cuts: Levels, Ranges, Targets

If $10 bills fell from the sky and every Democrat had enough money to live for generations, they would complain the bills weren’t $100’s, $10 are to heavy, they don’t own a carry bag. The cynicism, nastiness, negativity and deep seated psychosis from Democrats and the news media to think American companies won’t come home, they will use tax cuts only to buy back stocks, won’t hire, expand and don’t seek profit is at the top of psychotic thoughts. Pernicious thoughts and false idealisms end in destruction.

Democrats by tax raises drove companies from America while America’s Bummer regulatory war on companies and Dodd – Frank solidified a long stay. The Consumer Protection Agency inside the Federal Reserve offers another example to impose fines, charges and fees on companies to fund the Dem Party. I warned long ago Democrat desire to gain access inside the Fed. As usual, I’m always correct.

In anticipation of Tax cuts, I will later post already written Pay Go Rules.

Next we will hear Pay Go Rules, revenue neutral and deficits. Concepts to Pay Go rules were never solidified by the parties. The Democrat idea was to stop any Bush tax cuts by agreement to maintain government size. Revenue neutral is the concept to allow personal and corporate tax cuts but other fees and taxes would raise to maintain and grow government. Then comes scare tactics to government deficits as Tax cuts grow deficits by $1.5 trillion. How about cut government by $1.5 trillion then government is reduced to 1992 George Bush size. Democrats built on Pay Go Rules and related concepts and sold to the masses through an effective communication strategy, as usual for the Democrats.

Trump is on track, far ahead of the game and he knows exactly what’s he doing.

The 2018 strategy for me is gonzo, never to write another word in this lifetime. Honestly, confounded by NZD Dairy Auctions, BOJ ideological problems, Interest Rate Swaps as important, Yields and JPY. The list goes on. How about confounded by US interest rate drop Vs Europe rates rise.

I’ve done it all in the past 5 years and nothing more exists to complete. And plenty of competent FX persons with websites post great work but they are lost in a crowd of garbage that exists today. Funny thought how the computer destroyed information and competence.

EUR/USD notice 1.1901 dead stopped yesterday at the 1 year Forward Price? Here’s overall break points as I’m not posting targets any longer. 1.1746, 1.1803 and 1.2009.

USD/JPY watch as well as EUR/JPY and GBP/JPY. USD/JPY is supported by 112.46 and 112.27. Watch 113.53.

EUR/JPY watch above 134.90’s. GBP/JPY watch 151.71. AUD/USD watch 0.7673, NZD watch 0.7015 and 0.7037.

 

Brian Twomey

EUR/USD, Crosses, Forward Points: Levels, Ranges, Targets

Forward Points, for the most part, are FX conventions employed since the free float because of the current first ever experiment to allow exchange rates to trade against interest rates rather than the 400 year tradition to trade FX against Gold.

The Forward Point was actually used in 1930’s FX trading but it was adjusted as a measure to trade FX against Gold. As interest rates became the trade order in Jan 1972, the Forward Point was transformed to fit modern day trading as an interest differential. Only a few papers just found so far however reference the Forward Point in 1930’s trading and methodology wasn’t yet reviewed. The assumption is the Forward Point was factored against 1930’s trade methods in Open Interest/ Volume studies and Gold/ Silver Ratios. A difference in purpose existed however.

In 1930’s trading, focus was strictly on exports as IBM and GE weren’t established in other nations. The Forward Point is vital today to factor Forward prices especially as major companies need and trade Forward exchange rates across multiple borders. From a simple Forward price calculation materialized the Non deliverable Forward to satisfy trade in Black Box currencies. North Korea for example is a Black Box currency as its currency trades under non conventional means. South American nation currencies are Black Box currencies.

EUR/USD’s last 1 year Forward price was 1.1806. Today’s 1 year Forward Price is 1.1991. Forward Points transformed to actual pips are trading in ranges at roughly 153 pips. The distance from 1.1991 to 1.1806 is 187 pips which means 1.1991 over coming days represents an important break point.

Since 2008, only 3 persons on the planet mentioned CAD/ZAR as a most vital currency, function and import to the current trading world. The appropriation was never granted.

EUR/USD break Points 1.2010, 1.1804 and 1.1741. Currently oversold from averages. Must break points higher are  located at 1.1867 and 1.1884, below comes 1.1824 and 1.1807.

EUR/CHF overbought currently, sits above vital break points at 1.1570 and 1.1555.

USD/JPY is again must move from its current position. Supports are found at 112.42 and 112.14. Higher must break 113.09 and 112.84 below.

EUR/CAD sits miles overbought and vital break is located at 1.5004 to see a deep dive.

EUR/AUD sits overbought against vital break points at 1.5330 and 1.5338.

 

Brian Twomey

EUR, Cross Currency Basis, Interest Swaps, Forward Points: Levels, Ranges, Targets

Cross Currency Basis Spreads answers how much is the cost to swap 2 currencies, what is the currency supply and demand relationship, currency balance Vs imbalance, high vs low spreads to determine money market Risk Vs health as in risks, liquidity to ability to price of bonds yields as well as bond supplies.

Cross Currency Basis Spreads takes Interest Rate Swaps to the next lowest analytical depths because the spreads are unsecured interest rates and float at different rates daily, weekly, monthly. Interest Rate Swaps are quite different because those transactions are secured interest rates by agreement between 2 parties. Interest rate Swaps though vital impart zero information to a currency trade nor to a Forward exchange rate, especially today’s QE distorted and mispriced interest rate markets.

An Interest Rate Swap informs the 2 various Swap rates but then comes the Cross Currency Basis Spread questions as in what is the currency cost to each leg in the transaction, what is the spread and residuals against the spreads. Because Europe and America was designed as complete opposite financial systems so not to form a collusion, Cross Currency Basis Spreads as well as Interest Rate Swaps in EUR/USD will always, for the most part, factor a negative and positive.

The main difference between an Interest Rate Swap and Cross Currency Basis Spreads is an Interest Rate Swap involves factor to a bond yield while Cross Currency Basis Spreads are pure unsecured interest rate driven. Many traders focus on bond yields but its not the manner alone to view currency markets and prices because its a comparison between 2 unrelated markets. An Interest Rate Swap informs zero information to Cross Currency Basis Spread narrow and wide nor overall money market risks but both inform money outflows and inflows across borders as money must earn profit.

Smartest FX and / or Interest rate traders employ Forward Points because the numbers in my opinion are far easier to view and factor to a currency price, spreads and interest rates as well as to factor cash flows to transactions. Many offer Forward Points on an overall scale to imply exchange rate factors but this isn’t the way to view a currency price because it lacks the Forward Price and bond yield relationship.

Forward exchange rates are sold rather than bought. A 2 year Forward Exchange Rate price for example is seen at the 2 year yield. The range of the 2 year yield is transformed from yields to Forward Points to offer the price of the exchange rate to sell the Forward exchange rate. Same deal is performed with interest rates.

The Forward Exchange rate example is to apply to today’s trade is EUR/USD 1.1808. For many weeks, 1.1808 was the premiere short term Forward Price and it held for the longest time. Short term for my personal view is right round the 100 day average as this is the point where a vast majority of Forward traders were selling EUR/USD.

Many topics here deserve far more in depth explanations and methodologies. The overall point is currency markets are well defined and self contained markets because currencies and prices are backed by hundreds of years of market factors and conventions. If currencies are here 100 years from now then the same market conventions will remain.

The challenge to traders is not to necessarily master Cross Currency Basis Spreads nor Interest Rate Swaps but to have decent understanding to market conventions then abilities exist to design a workable trading system to last for the ages. Most vital overall to Cross Currency Basis Spreads is current wides because it informs to risks in money markets.

Personally, I deigned my own trading systems based on deep reads into academic and central bank papers. Don’t ever mimic these guys because they aren’t traders and as researchers they won’t alone bring riches but know what they are doing so to take their way to a better trade level.

All presented information was deeply outlined by examples in Inside the Currency Market 6 years ago.

EUR/USD, today’s 1.1806 broke higher so now view 1.1822 as next point for today then 1.1851. Downside must now break 1.1807 as 1.1806 rose 1 pip. Further support is located at 1.1764.

EUR/JPY. Breaks for today above are located at 133.07 and 133.33. Below 133.07 then comes 133.01.

USD/JPY. Break Points overall 112.43 and 112.18. Above break point is 112.69.
NZD/USD break points 0.7006 and 0.7043.

Brian Twomey

EUR/USD V USD/JPY, Cross Currency Basis: Levels, Ranges, Targets

As stated previously, for all 2018 trade strategy is to add and subtract 600 pips to most significant break points and range extremes as well as long and short points are established. Trend lines in USD/JPY and EUR/USD dated 10 years along the curve informs 600 pips as factual analysis.

At 600 pips factors to an overall 1200 pip year in 1 direction and this means a range trade year as well as a decent range in terms of previous years from 2008. At 1200 yearly pips is far below 2008 at 2500 but matches 2009 and 2010 at 1200 and 1100 pips. At 1200 pips factors far higher than 2011 to 2013 at 900 and 100 pips in each year in 2012 and 2013. In 2014 and 2017 experienced 1500 and 1700 pip years while 2016 was light at 400 pips. In 2012 and 2013, EUR/USD began and ended at 1.3200’s and then at 1.3200′ was a massive break point at the 10 year average. Once 1.3200 broke, the downtrend resumed to end at 1.0300’s in January 2017.

The most significant and turning point year by far was 2014 because it informed the 1.0300 bottom would fulfill its destination from 1.6000’s. From current day, 2014 remains a critical year as the change seen in currency prices is astoundingly crystal clear. EUR/USD was easily the leading pair to inform every other currency pair.

In 2009 was a 1200 pip corrective year from the 2500 point down move in 2008. EUR/USD’s 1700 point upmove in 2017 appears a correction but if termed a correction, EUR/USD has ability to travel far higher as the EUR/USD price is far to low and the downside is blocked.

EUR/USD for example reveals 1.1100 to 1.2300 while USD/JPY ranges from 118.00’s to 106.00’s. Despite outlines in 600 pip range extremes, prices represent bottom and uppermost boundaries and those prices aren’t recommended as good targets.

Why to short ranges is because EUR/USD and USD/JPY are married and contain zero distance between each other and the result is from 2014 price changes. The 125 USD/JPY and EUR/USD 1.0300’s extremes now trade next to each other. Both pairs are ready for a massive breakout especially viewed from pertinent years 2014 to 2017 as represented by Correlations at minus 33%, 13% and 18%. Married means neither USD/JPY nor EUR/USD can handle far downsides as both become severely oversold. The fight is to the upside.

The overall risk to 2018 is the Tax bill as $2 to $4 trillion is expected to repatriate from Europe at 8% then sustain a 20% tax thereafter. As Yellen reveals OIS in statements to derail readers, the pertinent indicator for 2018 is Cross Currency Basis as spreads in EUR, JPY and USD widened significantly since 2014 and remain wide today.

Wide spreads inform high risk to money markets and the message to central banks is money markets don’t trust current monetary policies otherwise spreads would trade narrow. Further to wide spreads is the enormous outflows expected from Europe. Much more exists to Cross Currency Basis but the side bar focus is my own interest rate methods related strictly to currency prices beats the academics writing on Currency Basis topics today.

The 2 main problems for the FED and ECB are interest rates were and are currently far to low. Both the FED and ECB rates are competing at the bottom against each other. Yet Fed funds current skyrocket overbought is the result to not allow a free float over 9 years otherwise Fed Fund levels would trade today appropriately. One main cause to wide Currency Basis is the same example presented in AUD/USD many months ago. Interest and exchange rates lack agreement, harmony and remain off kilter to each other.

USD/JPY upside boundaries are located from 116.05 to 118.42 while breaks below must occur at 112.16 then 111.77 and 110.64. Why rough downsides is the 5 year average is located at 108.88. Currently, USD/JPY is vastly oversold.

EUR/USD upside boundaries are located at the 5 year average now at 1.2013 and falling. Above break points: 1.1808, 1.1882, 1.1920, 1.1954, 1.2067, 1.2125, 1.2290 and 1.2321.

Below break points: 1.1733, 1.1544, 1.1502, 1.1437, 1.1411, 1.1358 and 1.1246. Current EUR/USD is overbought and located just below the 5 year average at 1.2013.

 

Brian Twomey

EUR, USD/JPY, JPY Crosses, Yellen: Levels, Ranges, Targets

Queen Yellen offered not only a raise against a dangerous overbought Fed Funds but she upped the volatility game therefore expect more volatility moving forward. Draghi is the best of the wayward central bank heads as he confirmed what we learned from Queen Yellen, volatility is here and will remain until the central banks close the Gaps. If Draghi remains on hold long into 2018 then he places severe pressure and volatility on CHF, DKK, NOK, SEK as all priced interest rates below Europe as is their self defensive posture to protect bottoms.

Far more interesting outside of G10 are emerging market currencies and positions of Repo rates because its incumbent upon Repo Rate nations to price above Reserve Ratios from 3% to 10% as world Reserve Ratio standards. ZAR for example cut in July, Russia cut in Oct. More Repo rate nations will cut and overall emerging market nations won’t escape the volatility offered by Draghi and the Queen. Poland and PLN by far lead all Eastern Europe nations followed easily by a smart central bank in Romania and RON.

Russia is most interesting as they upped defense spending due from US sanctions and now the current Russia deficit runs about $38 billion. While Democrat focus remains destroy Trump, Russia continues to gain chaos and inroads into the US. Failure to recognize Russia in severe enemy position will see much grief in US/Russia relations. Watch RUB volatility.
Volatility means we upped my Statistical Price Path game from roughly 50 pips per pair, per trade to right at 70 pips depending on the pair yet overall our positions run short, to daily to longer term.

USD/JPY and JPY cross pairs are all on the verge of significant breaks and its JPY will lead the way in overall market volatility. And why is again due to Queen Yellen’s desire to lower USD so to see higher Inflation. This places upward pressure on Non USD pairs and as well most undesirable for the central banks, AUD is a good example but many examples exist. SEK will become a basket case for destruction if they don’t order their economic game correctly.

USD/JPY break points are now located at 112.42 vs 112.10.

EUR/JPY break points 132.35, 131.87 and 131.55. Most important is 11.87 and current oversold.

GBP/JPY remains inside 148.49, 149.16 and 153.51.
AUD/JPY is trapped between 87.13 and 86.04
NZD/JPY is on the verge at break points 78.61 and 79.02
CAD/JPY 88.05 and 88.09 Vs 89.14.
EUR/JPY leads GBP/JPY while CAD/JPY is the overall risk determined pair to inform NZD/JPY and AUD/JPY. All will break respective points as USD/JPY breaks 112.10.
EUR/USD break points 1.1729, 1.1807 and 1.2013.
Brian Twomey

EUR, G10, McConnell, CFIUS: Levels, Ranges, Targets

In the 1980 Reagan years, Mitch sellout Mc Connell was a reliable and respected conservative but as the grow Government Democrat Party became successful under the 1st George Bush and Slick Willie then Mc Connell bought into the grow government movement.

All Republicans elected after Sellout McConnell were forced into the grow government movement or they remained forever on the outside. On the outside means relegation to sit on the Post Office Committee rather than most influential Committees such as Ways and Means and Judiciary as a few examples. Party money for reelection efforts becomes impossible to obtain and offered legislation won’t ever see a vote. Republicans forced conscription into the grow government Democrat movement allowed all to grow government by raising tax money on the private sector and by slick finance efforts.

As union membership dwindled, union money to Democrats dried up. Obummer then imposed on Federal agencies 30,000 pages of regulations to allow agencies enormous power over the private sector. It was the MAO plan. Government was for sale as Smithfield was sold to the Chinese, Banks paid up, the IRS imposed additional fees and charges, the EPA confiscated land. Every agency went on a raise money rampage. Then only Democrat party members received favorable govt contracts. Pay the Democrats then expect favorable treatment.

The Committee on Foreign Investment in the United States or CFIUS allowed sale of Smithfield as the largest agricultural company in the United States to sell to the Chinese. CFIUS approved Hilarious sale of Uranium to the Russians. Agency heads all sit on CFIUS and must vote. Without Inspector Generals to monitor the agancies, all CFIUS activity was done secretly.
Then ask who runs markets, the FED every trading day and by understanding FED actions is what allows perfect 24 hour predictions ahead as the Fed imposes its will. Inside the 2 most important functions of life most don’t have a clue how government or markets operate. I find these topics fascinating.

As I review forecasts for 2018, GBP/JPY and EUR/JPY could also use a deep dive correction. 140’s GBP/JPY could be seen easily. Best pairs to view are GBP/CAD, GBP/NZD, GBP/AUD, EUR/AUD, EUR/NZD and EUR/JPY.

The problem with GBP/USD and EUR/USD rangebound is the outlined cross pairs are far to high and in dire need of a deep correction. But EUR/USD and GBP/USD won’t offer assistance to take the pairs lower to their proper locations. EUR/USD for example can’t handle 1.0900’s yet above 1.2000’s faces a massive rough road of resistance.

Proper locations and rangebound commonalities for 2018 means prices are looking at 600 pips roughly either side of current prices.

USD/JPY must breaks are located at 112.42 and 112.01. If 112.45 breaks then longer term look for 108’s.

EUR/USD break points, 1.1729, 1.1808, 1.1841 and falling 5 year at 1.2016.

GBP/USD. Break Points 1.3258 and 1.3229.

GBP/JPY break points 149.06, 148.19 and 153.57. If 149.06 breaks then GBP/JPY falls a long way to 140’s.

EUR/JPY break points 132.26 , 131.86 and 131.55.

Brian Twomey

EUR, G10, Mueller/ Inspector Generals: Levels, Ranges, Targets

Most vital point to the Mueller investigation and why such chaos exists in the FBI and Justice Department is because America’s Bummer purposefully never appointed Inspector Generals inside the agencies. Inspector Generals job and overall purpose is watch over the agencies to ensure agencies perform their function/ Mandates, ensure laws are performed, watch personnel. Inspector Generals are the most important persons in agencies as they also maintain full investigative powers inside each agency.

If an agency lacks an Inspector General as was the case for many agencies under America’s greatest Bummer then agencies are allowed to run wild as they lack supervision. As all upper agency personnel, 15%, are all Democrat /presidential appointments then the field day began.

The system of American government through its checks and balance system applies to agencies as much as divided executive / congressional government to protect society from agencies and government gone wild. James Madison, Benjamin Franklin and the Founding Fathers greatest concern was government collusion, govt non function and operate against the people. This is exactly what we see today and as usual it all involves Democrats as every road leads to a Democrat.

Without an Inspector General then Regulation after Regulation is allowed as no regards to legality exists. Congressional requests for information are never fulfilled. Public information requests are never fulfilled. Without an Inspector General, nobody knows what the agencies are doing. Use private E-mails to communicate rather than follow the law to use government e-mails then agencies are totally insulated from inspection.

How Mueller and his band of crooks come to light is Trump by law appointed Inspector Generals and under the many Democrat scandals, Inspector Generals must by law investigate especially Ethics and criminal Laws suspected to be broken. Scandals and crimes always come to light because of the check and balance system. Expect many more Democrat scandals to materialize in time.

Government’s size allowed personnel and agencies to run wild as they are insulated from inspection. Its far easier to figure the confounded NZD price as it didn;t move from the dairy auction than it is to monitor all the workings of government.
Advice: Don’t forecast exchange rates against exchange rates because forecasts will result in far off kilter results and targets won’t be seen. Ask yourself this question from a top tier bank. Will GBP/USD trade to 1.1300’s in 2018, 2000 points in 1 year. And especially when EUR/USD is forecasted to 1.1100’s, USD/JPY to 114.00’s. Places the dairy auction in perspective.

EUR/USD break points, 1.1731 Vs 1.1808, 1.1841.

GBP/JPY break points 148.99 and 153.60.

GBP/USD break points 1.3259 and 1.3222.

AUD/USD break points 0.7649.

NZD/USD. Break point 0.6972.

Brian Twomey

 

EUR, G10, Yellen/ ECB: Levels, Ranges, Targets

ECB’s No Wotny informs interest rates must rise slow. The translation is if the ECB raises, we’ll only see a 10% raise and don’t expect 1/4 point at one shot. Queen Yellen and a possible raise places the ECB in a precarious situation. The ECB can’t raise while stimulus remains the ECB’s game plan otherwise they play the unsound Yellen economic game. More vital for the ECB, they must cut the interest corridor or the EUR swings wildly.

The far better move for the ECB is eliminate stimulus then focus on raises. The ECB’s weekly M3 money supply at 2.9 billion is far below the Fed’s 3.5. Then the ECB’s latest M3 decreased to 5.0% from 5.2% while M1 dropped to 9.4% from 9.8.

Economically, the ECB is in a far better position at 2.6 GDP to sustain itself over time as Queen Yellen’s raises brings FED funds to scary overbought. Another raise by Yellen further places FED Funds into dangerous overbought territory.

Yellen works backwards, she believes raises will bring prosperity while the correct economic approach is maintain the economic house first then raise. The economic house high priorities should be price indicators in Inflation and GDP but this is Supply Side economics and Yellen is a Keynesian with beliefs to money supplies and interest rates bring GDP higher. Hasn’t worked in 9 years but she remains ideologically committed.

Here’s a great Keynes quote from the General Theory. Economics is a science of thinking in terms of models joined to the art of choosing models relevant to the contemporary world. The translation is hello to the poor house.

Yellen was the Democrat party choice in 2012. In February when she thankfully leaves, expect story after story in regards to Yellen’s brilliance, how she steered the economy back to life. Meanwhile FED Funds proper position under heavy stimulus should’ve traded in deep negative. It should trade negative today.

Current OIS rates and Yellen’s favorite indicator trades today at 0.38, 0.34 last week and a question to raise this week. Yellen may follow OIS rates but she is never committed. Primary Dealer surveys as the more accurate indicator all see a 71% probability to raise in Fed Funds to 1.38. Again, we’ve seen this story before though.

USD/JPY. Break Points 112.24 and 111.91. Among the USD pairs in CAD and CHF, USD/JPY offers the best move. A severe problem remains inside USD/JPY. Current price is far overbought, an outright sell signal materialized and USD/JPY cannot remain in its current range. Its must move. Today’s upper brick wall is located at 113.90 and 114.17. Below watch 113.29.

EUR/USD. Overall break points 1.1808, 1.1841 and 1.1738 below.

GBP/JPY. Remains in range from 153.63 to 148.83.

GBP/USD remains overbought from break points at 1.3259 and 1.3216. Its the long terms averages most overbought.

 

Brian Twomey

 

 

EUR/USD Long and Short Range: Levels, Ranges, Targets

EUR/USD’s 5711 pip drop from 2008 at 1.6069 to 2017 January at 1.0358 factors to an overall straight line reduction of 634 pips per year and slightly outperformed Jan 1998 to 2008 at 1.6069 for 531 pips per year. Jan 1998 was factored against 1.0753 yet EUR’s introduction rate was 1.1795. Much volatility existed in EUR/USD’s early years as the questions to the exchange rate was will it price above or below USD. EUR/USD correct position is to remain always above USD and its why EUR/USD approaches multi year bottoms.

EUR/USD from 1998 to 2008 traded as low as 0.8251 to highs at 1.6069 for a mid point at 1.2160 while 2008 to 2017’s mid point is located at 1.3212. As seen below in averages, the 5 year is located at 1.2017, the 1360 day at 1.2066 , the 4852 day at 1.2079 then comes the 4689 day at 1.2124. From averages at 1.2948 to 1.1146, the mid point is located at 1.2047. The 2000’s area will remain the big break zone over time.

What holds EUR/USD from a far deeper move lower to 1.1311 is the break point at 1.1738. A break of 1.1311 targets 1.1172 and 1.1146. In the vicinity of 1.1311 and 1.1172, long is the way as EUR/USD’s price becomes dangerously low. I wouldn’t consider the possibility for EUR/USD at 1.0900’s. The absolute bottoms are located at 1.0600’s and 1.0700’s.

On the upside, 1.1807 and 1.1840 must break to target the falling 5 year average at 1.2017. The safe target above 1.2017 is 1.2609 and 1.2678.

The current USD/ EUR interest Corridor runs currently 48 points. If Yellen raises, the corridor will expand to a far distant 69 points and highest since 2014. Draghi’s question is not if but when will he raise. Draghi has to cut the corridor by raise Eonia to at least 0.92. Unless Draghi is prepared for much higher EUR volatility. By current estimates, EUR is going higher anyway so the raise stops a volatile EUR.

4 currency pairs ready for the big move in 2018 are EUR, AUD, CAD and NZD. GBP/USD and its cross pairs are sitting at dead center levels and may not offer big moves. CHF and cross pairs as well won’t offer much hope either. USD/CAD is actually dead center but cross pairs are at to high levels.

The cross pairs to watch are GBP/CAD, the Carney Cross, NZD/GBP AUD/GBP, AUD/ EUR and AUD/CAD. EUR/CAD despite currently far to high doesn’t offer the big move. Many more currency pairs and longer range forecasts will post in due time.

Following are averages from 80 day, Special averages and dated to Jan 1999.

80 day = 1.1807
XXX = 1.1738
337 = 1.1172
595 = 1.1146
850 = 1.1311
1105 = 1.1840
5 year = 1.2017
1360 day = 1.2066
1616 = 1.2234
1875 = 1.2453
2132 = 1.2609
2387 = 1.2708
2643 = 1.2925
2897 = 1.2948
3153 = 1.2891
3412 = 1.2877
3669 = 1.2818
3924 = 1.2678
4178 = 1.3462
4432 = 1.2256
4689 = 1.2124
4852 = 1.2079, Jan 1999.

 

Brian Twomey,

EUR, GBP, JPY, Dems: Levels, Ranges, Targets

The abrupt expulsion of Democrats as a result of women affairs was a perfectly planned and coordinated Democrat party event. Nobody prepares and implements strategies long and short term better than the Democrats. They are not only absolute masters of the political game for 100 years but Dems maintain light year distance ahead of cultural society and the sleepy Republicans.

Many examples. How were Democrats able to steal and maintain the black vote from Republicans when the purpose of Republican party formation was to eradicate slavery. How Liberal / Conservative labels shifted over the years from Conservative Democrats and Classical Liberal Republicans is a misnomer in modern day politics.

The Dem strategy and reason for the latest disposal of party members is 2020 with a view to recapture the lost women vote by offering a women as the next candidate. The appeal by Dems will focus strictly on young voters, educated and non. Dems own the total black vote so this group is marked for exclusion. The type of candidate will soon be known in this 3 year effort as Hollywood and the culture will inform as force acceptance into society in short time.

The longer range for AUD/USD is located from 0.6400’s to 0.9000’s. Current AUD at 0.7500’s trades at its lower multi year range. Problem for AUD/USD’s upside is break points at 0.7664, 0.7794, 0.8297, 0.8468 and 0.8774. All lines are falling. Context to current AUD prices is in the 1.1910’s and 1920’s, AUD traded at 2.400’s and today’s 97 year mid point is located at 1.5000’s.

NZD/USD at 0.6500’s and 0.6300’s will see a rough proposition. NZD 0.7500’s is a far more comfortable zone yet as AUD, much rough points exists above to begin at 0.6976, 0.7070, 0.7272, 0.7435 and 0.7531.

Overall, non USD pairs in total are fast approaching multi year bottoms.

EUR/USD break points today are located at 1.1808 and 1.1740. To see 1.1740 then 1.1751 must break below. A break at 1.1763 targets 1.1812.

GBP/JPY faces a big break at 153.66. Break to the downside is located at 153.09 then 152.78, 152.59. Above 153.09 targets 153.24.

GBP/USD is far overbought and 1.3499 is first massive resistance point. Below must break 1.3472, 1.3455 then 1.3438.

USD/JPY made its move as mentioned yesterday but momentum remains and another spike is on the way. Break point are located below at 112.19 and 111.86. Upside targets a brick wall at 113.97 provided 113.73 breaks higher.

 

Brian Twomey

EUR, Mueller, Economics: Levels, Ranges, Targets

As we watch Mueller and the unyielding Democrats perform the greatest coup ever seen in modern day government and in the history of every spy novel ever written, the clear result is the Obummer effects will be seen for many years in the future. Why Obummer revealed himself as a communist after hiding such revelations for 100 years informs exactly how powerful Dems became and the depths of government ownership throughout the agencies.

Electoral victory for the Democrats is a small win as the greatest prize they own is the Bureaucracy. Why the stacked deck is because the Democrats own the Civil Rights Division in the Justice Department. Civil rights in the modern day is defined as voter rights to any issue. Over many years, the Democrats appointed lefty attorneys then grew Civil Rights division funding to appoint more attorneys. Now the Civil Rights Division owns the Justice Department. Democrats laugh at multi year court fights as it doesn’t stop their ability to play the long game.

Trump and the comatose Republicans either place a sledge hammer on the Democrat long game or they lose for many years to come. DACA is one example.

If Trump approves just 1 DACA child in today’s meeting with la la Paloozi and “I cry for Immigrants” Chucky Schumer then the Republicans can expect to lose the House of Representatives in quick time. The Democrats will load voting age DACA children in Republican Districts and dominate those districts for many years in the future.

Fascinating political developments but understand Democrat public comments then one knows the plan of attack as the Democrats always reveal themselves.

Let’s look at America;s next genius, Queen Yellen.

Total Public Debt to GDP Ratio is currently 103% and the highest since 1966. As highlighted by Jim Rickards yesterday and correct by fact check is Reagan;s tax Cut occurred when the public debt to GDP ratio was 30%. At 103%, any tax cut is a minor band aid and its effects will last extremely short term.

To place 103% in context is to view data from Rogoff and Reinhart: 8 Centuries of Economic Folly, 1970 Debt to GBP ratio was 49%, 1981 was 30%, 2012 was 59.49% and today 103. Debt to GDP ratio doubled in less than 5 years. Astounding but extremely dangerous.

General Govt Gross Financial Liabilities as % of GDP in 1970 was 49% and 60% in 2012. Higher today and again dangerous.
Add the losing experimental concept to raising interest rates under a high balance sheet without any chance for reduction then the economic destructive course is underway. Further is the Senate Republicans non serious wish to begin Tax cuts in 2019.

The vast majority of previous crashes except for 1908 were caused by Government overspending as debts far exceeded ability to pay. America is close. Exports led the way out of the 1929 crash as the % of world exports declined 69% from 1929 to 1932. Exports bottomed in 1930 and Peaked from 1968 to 1973. Current world exports are now middle range but overall lack ability to assist in growth if a crash was seen. A severe drop must be seen first but then comes the 1930’s concepts in exchange levels and Competitive devaluations to gain export advantage.

Smart as usual are the interest and exchange rate traders as ranges this week for all currency pairs severely restricted. Far worse among USD pairs is USD/JPY as current price cannot remain in its present location.This means watch EUR/JPY as well because its past lopsided price no longer contains built in resistance points. EUR/JPY is normalizing after many many months in off kilter status.

RBA wants to see AUD/USD 07000’s. AUD has a better chance at 0.8000 before 0.7000.

EUE/USD. Break points 1.1805 Vs 1.1744. Above 1.1805 then comes 1.1840’s.

USD/JPY break points 112.15 and rising 111.82. A massive brick wall today is seen at 113.15 and 113.10.

EUR/JPY break points 132.02, 131.72 and 131.55. Most important 132.02 and a break means far lower. Overall watch USD and non USD pairs rather than cross pairs for direction as they are leading the way.

 

Brian Twomey

 

EUR, GBP, JPY: Levels, Ranges, Targets

 

What is the derivation of the current political environment to divide us as societies to far extremes. How is it possible brothers align against brothers and even political scientists war against their Poly Sci friends. Society’s middle ground and normal comfort position was ceded and occupied by the political system by introduction of wedge issues and it divided us as we were forced to take positions to one extreme or another.

Every night, the news media aligns the factions and pure chaos ensues as logic, facts, reason and brotherly love leaves us. The Fairness Doctrine was eliminated years ago because it was thought to align warring factions against each other on TV would cause chaos.

By introduction of wedge issues in successive order quickly divides us as the political system takes the middle ground by sheer bully tactics. Last time such societal factions were seen was Lyndon Johnson and the great society programs. Johnson introduced Fair housing, civil rights, medicaid, voting rights and the list goes on as it has done today.
What heals the curent sickness in our society is economic growth and prosperity. Wedge issues, predominatly social progrms won’t maintain its high status. The political system will then leave its center position to be occuppied again by citizens and reason. We’ll stop here.

EUR/USD. Watch break points today at 1.1805 and 1.1746. Most vital to see far lower is 1.1746. What’s lower mean, 1.1400;s.

We won’t see 1.1746 break today as supports exist at 1.1802, 1.1794 and 1.1781.

EUR/JPY has a long way to go to break 131.97, 131.66 and 131.55. Massive supports exist today at 132.17 and 132.11 and both will be seen on a break of 132.43. Above, watch 132.68 to travel higher.

GBP/USD. 1.3415 is most important line today as below means 1.3388, 1.3371 and 1.3362.

GBP/JPY break points are located at 153.71 and 148.57.

USD/JPY break points are found at 112.10 and 111.80

 

Brian Twomey

EUR/USD and Russia Investigation: Levels, Ranges, Targets

The recently released 48 page report by the Department of National Intelligence reveals in deep detail Putin’s direct order to undermine the 2016 elections to favor Trump over Clinton. The overall campaign focus was undermine the United States system of democracy by use of cyber tactics to influence United States citizens to question their nation, systems, fairness Vs unfairness.

Freedom House as well as the 116 page, June 2016 Department of Intelligence reports reveal voter influence campaigns were launched by Russia in 16 other nations. Who is the enemy? Russia, the Democrat Party as assistants to Putin and the Republican Party for silence.

Putin saw in Clinton a threat derived from the 2011 and 2012 protests in Moscow, regime change in the Ukraine, Dem Party orchestration of the Arab Spring, installment of the Muslim Brotherhood in Egypt, against Russia in Syria and Senate sanctions on Russia.

So feared was Russia to believe Clinton would target Putin for Regime change, Russia radically increased its Defense spending. Russia always favored Democrat electoral victories because Dems first priority in power is decrease Defense spending to shift monies to social programs. War threat was eliminated.

Putin’s main ally and scary Rasputin look alike in Moscow is most dangerous Alexander Dugin. Dugin’s writings in early campaign days favored Trump and it was Dugin’s influence that convinced Putin to embark on the influence campaign. When Trump uttered the words, I can get along with Putin and we can solve problems was all it took for Russia to support Trump.

Most important is Russia lacked ability to influence the campaign except to the degree they targeted Ads against Clinton when she was ahead in the polls and targeted ads against Trump when he was ahead. But the advertisements were all geared towards concepts such as  America is no good, unfair, favors white people, rich people, racist.

Russia ads simply reflected Democrat Party lines so the groundwork for Putin was layed on their laps. Russia could’ve easily hacked into every state’s campaign computers to change votes such as was demonstrated by the Frontier Foundation. This would’ve been declared an act of War and Russia was not crossing those lines. Russia’s only job was create chaos and weaken America. The irony is America’s Bummer accomplished Russia’s mission while the Republicans allowed it.

Enter Democrat Mueller and his team of devoted Democrats. Mueller’s mission is eliminate Trump by impeachment, charges or any means necessary if only they can prove Trump colluded because Trump policies and “drain the swamp” is a deep threat to Democrat power. A successful Trump can knock Democrat electoral victories back many decades. 200 plus pages of intelligence reports highlights in deep detail Russia’s limited role and limited success in the campaign. But reports further highlight Russia didn’t collude with the Trump campaign.

Mueller not only won’t find collusion but this entire Mueller investigation is a giant Public relations campaign cooked by the Democrats and news media partners to maintain pressure and undermine Trump. The Manafort and Flynn arrests despite news media happiness added to Trump pressure to instill into the public the idea that Trump is not a legitimate president and won by other than legitimate means. Therefore policy successes can’t credit to a non legit president. As time goes by and Mueller fails, we ill soon hear Trump as tyrant, dictator, crazy, insane, bizarre. It will get much worse from here.

EUR/USD Overall break points 1.1804 and 1.2021. At 1.1804 won’t break today as massive support exists at 1.1806 and 1.1807. Lower must break 1.1858. Higher must break 1.1871 to target 1.1907 and 1.1922.

AUD/USD approaches a big break at 0.7672 then comes 0.7806. AUD/USD’s partner NZD/USD break point is located at 0.6983 then 0.7105.

GBP/USD, we continue to play the short side as GBP remains way overbought. A break at 1.3445 targets 1.3423, 1.3406 and 1.3397.

 

Brian Twomey

 

EUR/USD and Trump, Tweet and Communication

Why Trump’s twitter strategy and fake news label as a communication plan contains a purpose to drive a massive wedge between the power of the Democratic party and its vast majority news allies. If Trump can discredit the Dem news media then Democrats are not only isolated but as they speak for themselves then the 100 year anti american words and policies will be revealed.

By Trump’s twitter writings, he’s turning the Democrat / News media alliance back on itself. Its working brilliantly as Trump expected as now even the news media waits daily for Trump tweets. Trump knows he’s winning and he’s having a great time as he has the news media in his hands. Trump now leads the news media and creates news and this is a first since the Dems and the news media conspired to take down Nixon.

Previously, once Dems announced a policy, the news media kicked into high gear with human interest and other related stories to force acceptance. The news media performed the Dems work and Dems didn’t have to speak one word. As long as Democratic voters heard the magical news media words from Political Philosophy, Equality, Justice and fairness then the Roman army buys into the Dem policy. It doesn’t take much to buy democrat votes as the appeal is based on emotion rather than fact.

The kicking into high gear aspect meant an imperative for news media audiences to remain in the present. To do this, Dem policy stories were pounded into audiences daily. The news media created a daily ongoing soap opera day by day. To remain in the present with focus on the next leg of the news media story, audiences would never perform research, find the truth, the costs, the consequences and most important, Facts. If the news media says it, it must be fact.

Trump’s twitter strategy appears to be working as a new style, balance and news media focus appears to be emerging. No longer can Dems rely on news media as partners to report one sided stories. But Trump also knows the news media is his greatest threat rather than the Democrat party by itself. Consider the Dem debate in the tax cut bill as tax the rich, tax raise for poor. Arguments fell on deaf ears. To succeed, Trump must maintain the constant pressure.

Equal abuse to the majority Teddy Roosevelt Republicans for failing to fight against Democrat policies and failure at a communication strategy. Nothing new as Teddy Roosevelt Republicans lacked a communication strategy since Teddy Roosevelt in the 1900’s.

EUR/USD overall break points 1.1803, 1.1735 Vs 1.2022 at the 5 year average. Above must break 1.1872 to target 1.1895 and 1.1924. Below watch, 1.1858.

GBP/USD is far overbought as out strategy in last days is trade the short side. Overall break point is 1.3214. A break below at 1.3439, targets 1.3417, and 1.3401.

GBP/JPY. is fast approaching the 10 year average at 153.77 while below break is located at 147.99. GBP/JPY as well is far overbought and short only strategy is out way forward.
Brian Twomey

EUR/USD Gaps and Ranges: 2008 to 2017

The original intent in this writng was to view daily currency pair Gaps and EUR/USD as proxy because its most widely traded. To view daily Gaps alone imparts zero information because it lacks the answer to what drives EUR/USD due to its two sided composition therefore its imperative to analyze the longer term view. Secondly is price location must be known. Lastly, not all currency pairs work as smoothly as the EUR/USD.

In USD/JPY and EUR/JPY are nightmares using current methods because price readjustments are absolutely essential otherwise its an impossible effort. To know the adjustments then is to understand a deeper insight into the EUR/USD, USD/JPY and EUR/JPY range, Gaps and overall positions. EUR/USD ranges always exceed USD/JPY and this is true from 1998 to 2008 and 2008 to 2015. EUR/USD ranges always exceeded DXY while EUR/JPY bounces in between EUR/USD and USD/JPY.

Gaps are not only built into the price structure in every currency pair but its impossible for a currency pair not to contain Gaps. Gaps are defined as daily distance between vital break points as well as distance from daily prices. The long view was seen by European interest rates through 4 daily spot checks ( May, Sept, Nov, December) in each year from 2013 to 2017. Enough analytical information was seen from 2013 to 2017 as prior to 2013, European interest rate maturities began its elimination stages. July lacked inclusion in the spot checks yet July served as reinforcement to overall findings.

From 2008 to 2017, EUR/USD prices were driven by either EUR by itself, USD by itself or a combination of USD and EUR. Interest rates clearly delineates this assessment because break points are revealed as EUR only, USD only or combination USD and EUR. EUR in 2014 was the most crucial year as the EUR/USD choice was price driver as either EUR or USD. The result was 2014 to present day, EUR/USD was / is driven by both USD and EUR,

If EUR/USD is driven by either USD or EUR then massive Gap distance exists in the break point framework and price movements are able to swing wide which means volatility is high. If EUR/USD is driven by EUR and USD then volatility is low because the price Gap is trapped between USD and EUR.

Since 2008, EUR/USD traveled down a 9 year road to price Gap compression. Certain years were good as in 2011 to 2012 while 2013 to 2014 as well as 2015 to 2017 were low movement years. In January 2017, EUR/USD 1.0339 at 0.06% was the absolute bottom from 1.6029 in 2008. EUR/USD above the current 25% point has every ability to fly far higher or lower. To travel lower as EUR and USD will experience a slow price move. Higher means watch 1.2800 to 1.2900’s at the 50% point as this area represents the USD and EUR separation. Lower at 25%, watch 1.1300 to 1.1400’s.

To the overall question is technical analysis dead or are prices in a new period , EUR/USD traveled continuously in 3 stages from severe wide distance to middle range then to current severe compression. Current technical analysis as well as the current period lays in severe dormant stages in wait for resuscitation. Eventually an enormous breakout will be seen as EUR breaks free from USD or vice versa.

Overall, EUR/USD traveled lower but it lacked a choice therefore the question how it arrived at its final destination to some degree is meaningless. Outside events only influenced the downward spiral as the EUR/USD price was far ahead of any consequences in economics, interest rates, money supplies.

Interest rates reveal allowable daily price movements and this serves as an insight to Gaps and ranges as well as likelihood to possible breaks. EUR/USD traded in 2013 and 2014 as high as 78 daily pips while early 2015 saw a massive compression to 50 ish daily pips. Compress the daily pips, closes Gaps and ranges.

A typical 2013 example as EUR/USD traded in the 1.3500’s.

Break points are as follows: 1.3290, 1.3355, 1.3656, 1.3722. From 1.3290 to 1.3722 is a distant 432 pips. From either side of daily pips existed 225 pips from 1.32 and 1.37. Fast forward to 2017, break point to break point is about 100 pips total and 50 ish pips from daily prices.

Its always a question to timing and exchange rate level to an interest change.The timing and exchange rate levels appeared appropriate in June / September 2014 when the ECB went negative as a 63% distance existed from 1.3600’s and 0.7300’s in USD.

In July 2008, EUR/USD’s price was 1.6029, USD/EUR was 0.6238 for a difference of 0.9791 or a distance of 97% and a ratio of 2.5% to 0.38%.

By July 2009, EUR/USD traded 1.5132 while USD/EUR was located at 0.6608 for an 85% distance. Despite an 897 pip move in EUR/USD, USD/EUR remained at its same 2008 levels which means the EUR/USD drop was driven purely by EUR/USD.

As July 2010 revealed EUR/USD at 1.3087 and USD/EUR at 0.7641, a compressed distance at 54% existed as USD and EUR shared equal participation in exchange rate moves.

July 2011, EUR/USD corrected to 1.4573 while USD/EUR dropped to 0.6862 for a distance of 77%.

July 2012, EUR/USD dropped to 1.2673 as USD/EUR continued its rise to 0.7890 for a 47% distance and a break of the 50% line since 97% in 2008.

July 2013, EUR/USD corrected to 1.3300 and USD/EUR dropped to 0.7518 while distance factored to 57%.

July 2014, EUR/USD corrected again to 1.3695 as USD/EUR dropped to 0.7301 and a 63% distance.

JULY 2015 Saw big changes as EUR/USD at 1.1207 and USD/EUR at 0.8922 experienced a 22% distance.

July 2016 while EUR/USD at 1.1178 and USD/EUR at 0.8946, distance remained at 22%.

July 2017, at EUR/USD 1.1853 and USD/EUR 0.8436, distance rose to 34%.

 

Brian Twomey,

EUR and Income Taxes: Levels, Ranges, Targets

Yet another day to tax reduction and its due as usual to the obstructionist Democratic Party as they forced, at my count, 5 Motions to Recommit the Bill back to the Finance Committee. The Dems lost every vote as expected but if successful, the bill would’ve traveled back to the finance Committee for additional hearings and votes before the bill could again see a vote on the Senate Floor. At 5 Motions to Recommit is a long time in the life of a Slooow moving Senate. A viewer would become an expert in classical music before they see the resolution in 5 rounds of votes. So day 2 is here as again the Dems suffer the Yellen effects, they took the money and won’t give it back. How did we arrive at this day.

The Income Tax was temporarily imposed by Republican Lincoln to assist in Union, mostly the South, rebuild after the Civil War. After rebuild, the Income Tax was rescinded as promised by Lincoln yet it was ruled by the Supreme Court as Unconstitutional in 1894 and long after Lincoln’s death. Republican McKinley was assassinated in the 1890’s at a time to not only American prosperity but the anti American Progressive movement was in full swing. Enter the next enemy of America , Republican Teddy Roosevelt.

Roosevelt was busy during his term to create Government agencies, finance the Spanish American War and stop Capitalism’s progression. He endorsed and faught hard for an estate tax, inheritance and Income Tax. Republican Taft’s succession of Roosevelt passed the 1% Corporate Tax and Taft Endorsed the 16 Amendment to impose an income Tax as a means to beat the Supreme Court’s purview.

As Roosevelt and Taft split conservative and progressive Republicans, Democrat Wilson sealed the Income tax fate by passage of the 16th Amendment. The key was Wilson’s lowering of Import Duties from 40% to 29%. Sounds familiar ? as the question to make up for lost revenue to Import Duties, 1% was imposed as the first Income tax, More familiar sounding debates today is 1% was imposed on incomes over $3,000 and $4,000 for married couples. The Bureau of Internal Revenue, now the IRS was created to collect the tax on who would’ve guessed the famous 1040 form. Then, the 1040 and other Tax forms were considered complicated.

As Wilson lost Tax revenue to Duty Imposition, then began the massive rise over years in income and other taxes. Government grew exponentially as a result but the rise never stopped and continues to this day.

The conservative Republicans under Harding, Coolidge and Hoover lowered income taxes in the 1920’s, Add Reagan and Trump, only 5 presidents since Lincoln lowered taxes. Trump is fighting against not only a 100 year tax rise tradition but Dems as well as the Teddy Roosevelt Republicans are against his lower tax proposals.

Debates as in tax the wealthy and government deficits remains a 100 year tradition.

How many government agencies exist in the Federal government to finance tax increases? Well 200 to 400 depending on who is believed .How many outside government groups are funded by government revenue. Good question.

EUR/USD. Overall break points now 1.1803, 1.1737 and 1.2023. Lower for EUR means break at 1.1915 to target 1.1893, 1.1876 and 1.1861. Higher must break 1.1928 to target 1.1954 and 1.1981. EUR leans to overbought but seen only in longer term averages.

GBP/USD. Must break 1.3542 to target 1.3497, 1.3482 and 1.3461. Above must break 1.3538 to target 1.3450’s. GBP is severely overbought and 2 day recommendation remains sell rallies and not take 1 pip long.

USD/JPY overall break points are located at 111.95 and 111.70. Lowe means breaks at 112.47 to target 112.31, 112.16 and 112.09. Higher must break 112.70. Today’s JPY brick wall is located at 113.17 and `113.20.

 

Brian Twomey