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

Again as EUR/USD and USD/JPY embark into Week 7 since February 23rd, range compression continues as EUR/USD loses 5 pips to trade wides at 1.1824 to 1.2824 while USD/JPY drops 3 pips to trade 100.79 to 109.50. USD/JPY lost 24 topside pips from 109.74 since March 10 while EUR/USD gained 22 pips from 1.1802 to 1.1824.

The 7 week explanation on failure to break significant levels is absolutely certain as cause for range compression but a far better interpretation is DXY trades 585 pips between its 5 and 10 year averages from 91.45 to 85.60. DXY Friday broke most crucial 89.95 and threatens lower at next 89.06 and then a far distance to next points at 87.36, 86.62 and 86.01.

The DXY break at 91.45 in January and 89.95 explains EUR/USD support formation as well as USD/JPY topside drop. but fails to explain an uncertain price in USD/JPY. A DXY break lower as well is comfortable within its longer term 86.11 to 93.78 range.
Above, 90.28 and 90.66 must break in order to consider a run to the 5 year average at 91.45 on breaks at 91.05 and 91.15.

Above 91.45 longer term then next comes 92.41 and 92.77. Overall, DXY trades inside 200 and 300 pip ranges as the past 7 weeks traded 88.00 to 90.00’s. Below 89.95, DXY remains in downtrend mode and a trend just underway.

EUR/USD possible base from last week failed to materialize this week as the overall EUR/USD price failed to move to significantly change the forecast. EUR/USD is stagnant but focus to the downside as 1.1400, 1.1300 and 1.1200’s remain far overbought. EUR/USD requires another drop before a move higher and the same story from last week.

EUR/USD sell points for the week are located at 1.2341, 1.2354 and 1.2361 then 1.2400. Severe caution from danger zone between 1.2361 to 1.2400. Below, 1.2241 and 1.2220 must break to target 1.2155, 1.2081 and 1.2026. Caution as 1.2026 as a break is the line to target the 5 year average at 1.1957.

Higher for USD/JPY must remain within 106.61 to its significant break point at 107.85. Higher must break 107.12 then 107.85. Massive headwinds ahead on a 107.85 break at 108.25, 108.79 and 108.86. USD/JPY’s line at 108.86 is crucial to target the 5 year average at 109.89. USD/JPY remains in week 2 as a struggle against itself and 107.85 will provide significant resistance and not ready to crack. View 107.85 to EUR/USD 1.2220.

Below 106.61 targets 106.22, 106.15 and 106.01 then a massive dropoff to 105.26 and 105.15. Good long point at lower 106.00’s. Overall, USD/JPY remains at the top of its range and higher will remain a struggle.

The trade methodology over years for USD/JPY and EUR/USD is the day trade as those trades are far more exact, reliable and profitable rather than play around with current break points.


Brian Twomey

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