EUR/USD V USD/JPY : Levels, Ranges, Targets

As EUR/USD and USD/JPY head into week 6, range compression remains the story as EUR/USD’s overall range dropped from 524 pips Feb 23rd to 505 this week while USD/JPY’s longer term range dropped from 447 pips to current 438.

EUR/USD’s 505 pip range means this week’s larger range is located from 1.1821 to 1.2825 and March 10, the range was 1.1802 to 1.2828. This week’s USD/JPY larger range is located from 109.54 to 100.77 and March 10, the range was 109.74 to 100.73.

Neither EUR/USD nor USD/JPY wider ranges failed to materially change over 6 weeks. Constriction at the wider ranges causes compression at the short ranges as EUR/USD and USD/JPY trade aimlessly over 6 weeks. Failure to break significant points is a slack explanation part of the story.

EUR/USD 1.2800’s remain blocked particularly 1.2807 at the 10 year average and 1.2841 at the 14 year average. Why failure at 1.2800’s is because averages at 1.1200’s, 1.1400’s and 1.1700’s achieved astronomical overbought. Those averages remain overbought into week 6 but as EUR/USD continues to range trade at current lower levels, skyrocket overbought is fast losing its status and moving to normality.

USD/JPY was and remains deeply oversold at 113.00’s, 111.00’s and 110.00’s while the downside over the past 6 weeks was severely blocked at high 104.00’s to lower 105.00’s. USD/JPY downside this week is severely blocked at 105.16 and 104.69 but both are the lower break points this week to challenge its deeply oversold 14 year average, now at 102.99.

EUR/USD’s past few weeks report was its price is to high and must adjust lower and it performed as written. This week however EUR/USD is forming a base and the same base reported in AUD/USD. USD/JPY is severely afflicted with uncertainty as it desperately wants higher levels but lacks ability at its break points therefore USD/JPY fails to lead the way this week in favor of EUR/USD.

Higher EUR/USD must break 1.2323, 1.2360 and watch closely the sell point at 1.2385. If EUR/USD travels above 1.2385 to the next break point at 1.2402 then short to 1.2385 and below.

Watch 1.2319 as 1.2319 represents the last level to the most vital break at 1.2231. If EUR/USD is forming a base to travel higher as it appears then 1.2231 will hold and EUR/USD moves higher to the upper 1.2385’s. EUR/USD is challenged at 1.2231 by 1.2208 and a break targets 1.2158, 1.2153 and 1.2077. A break of 1.2231 will see 1.2077.

Overall, EUR/USD still must travel lower before an upmove begins.

USD/JPY to travel higher must break 106.61 and most vital 107.71 to target 108.77, 109.19 and the 5 year average at 109.86. From the close at 106.28, USD/JPY travels higher to challenge 106.61

Lower USD/JPY means 106.21, 106.16, 105.28 then 105.16 at the break point. Long on any price drops to 106.61 is the overall strategy as 105.16 holds.

Overall USD/JPY range 107.71 to 105.16 and EUR/USD 1.2231 to 1.2385 and 1.2402.

 

Brian Twomey

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