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,

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