EUR/USD V USD/JPY and G10: Levels, Ranges, Targets

The common theme to currency market prices this week from a cross section of 10 various yet pertinent currency pairs is prices remain trading around significant break points. This means price ranges trade from roughly 50 pips in USD and Non USD pairs such as EUR/USD, GBP/USD, USD/CAD and USD/JPY to 75 pips in more wider ranging cross pairs in EUR/AUD, GBP/CAD, EUR/NZD and EUR/CAD.

JPY cross pairs remain challenged and as examples EUR/JPY 133.11, clear uncertainty in risk pair CAD/JPY yet a clear direction higher for AUD/JPY.

Trade around significant break points adds to not only distinctly settled prices but uncertainty dominates current prices as clear direction remains a challenge for many pairs and this means overall the choice to which pairs to trade for greatest gains must be highly selective. Settled prices remained the theme last week, seen this week and unless prices get moving to crack break points then the same overall market order will be seen next week.

Long term forecasts and themes are the result of price views over time horizons and remains for weeks, to 1 month to multi months. Currency settled prices for example now enters week 3 and reported weeks ago.

GBP last week was the outlier as it broke widely reported 1.3915. The break represented a new range from 1.3915 to 1.3317 from last range at 1.3915 to 1.4502. The greatness of the Great British Pound is movements and ranges are wide with terrific movement potential but it loses its greatness as it desires to follow or not to follow overall market prices.

Yet the follow, not follow theme changed in market prices alongside the new interest rate structure in place for 2 years.

Traditional GBP was for decades market leader and all prices automatically followed but GBP dropped 185 pips and remainder pairs except GBP remained range bound. Certain days, EUR becomes leader while all pairs trade ranges. Currency pair selection becomes highly significant to the new market order.

EUR/USD’s larger range drops another 6 pips this week to 490 pips inside an overall range from 1.1836 to 1.2819. Since February 23rd, EUR’s larger range dropped 34 pips and most responsible is the topside fall as bottoms remain week after week to form significant supports. The 1.1200’s, 1.1300’s and 1.1500’s are attributable to the topside drops as those points remain overbought and a lower EUR requires ability for lower averages to rise and work off overbought before EUR will see a lasting trend higher.

While 1.1836 to 1.2819 is reported as current ranges, actual range is located from the 5 and 10 year averages from 1.1948 to 1.2779. Chances of a break at 1.2779 are extremely slim.

EUR/USD break point is located at 1.2213 to offer targets at 1.2262, 1.2289 and a solid line at 1.2300. Below 1.2150 and 1.2162 offer supports then 1.2082, and 1.2018. Watch for longs at 1.2104. Same tired EUR is expected however below 1.2213 then rises are corrections.

USD/JPY topside is the story to drop USD/JPY this week. Falling against USD/JPY to move higher is 109.69 and 109.43. The break point however is located at 108.52. USD/JPY remains highly conflicted as no direction or trend is established. The break last week at 108.04 and 108.17 was driven strictly by USD short rates. Above 108.52 represents a correction while below then 108.17 and 108.00 then 107.32 and 107.12.

EUR/NZD. Watch 1.7089.

EUR/AUD watch 1.6037 and lower to 1.5939.

GBP/USD watch this week longs at 1.3720 if seen and break point remains rough at 1.3910 and 1.3915. Above 1.3915 targets 1.4110 and longer term 1.4216. Until 1.3915 breaks and it doesn’t appear likely, price rises as in EUR/USD are corrections.

AUD/USD’s 247 pip drop significantly performed great damage as AUD remains highly oversold and should trade to 0.7649 and much higher longer term. Tall order for AUD yet its potential higher is astounding. At 0.7592 and 0.7569 are only break points lower. Long any drops is the only trade. Bank calls for a 0.7100 AUD lacks any credibility as 0.7503 hits extremes and longer term 0.7410 as well remains nearly impossible then consider a slower range movement to AUD and 0.7100 appears more impossible.

Only a possible OCR drop would perhaps see 0.7100 but the RBA is talking raise by 2019 and Domestic conditions overall are currently running strong against Household Consumption up, Domestic Demand up, employment up, temporary drop in exports, GDP expected higher, Inflation lower.

USD/CAD’s significant overbought targets lower prices while 1.2722 remains the level to see much lower on a break. Price rises are slated as shorts due to overbought. At 1.2860 and 1.2899 is not expected due to extreme prices but good sell points in case of market flukes.

Brian Twomey