EUR/USD, G10, Maintenance Periods: Levels, Ranges, Targets

Month end before QE and central bank control and management to exchange rates contained a significant meaning but today its a throw away term and lacks any importance.

Month end once meant a re calculation and adjustment to trading positions and this re calculation was an imperative because exchange rates moved 3, 4 and 500 pips on any given trading day. A huge difference existed from month to month and trading positions required adjustments because of the divergence between trend Vs Range pips. Trend pips were far more vital than range pips and a re calculation accounted for trend pip movements.

Today changed as ranges are more vital than trend pips.

USD/JPY for example moved barely 200 pips per month since Feb or recall the 2 month hold to EUR/AUD as it barely moved 300 pips per month. Take any pair within the 28 majors and monthly movements require practically zero adjustments but it depends on overall movements.

Month end was derived from bank Maintenance Periods as banks over past decades were responsible and traded the vast majority of exchange rates for the purpose to balance overall deposits.

Month End is counted by 35 days inside world banks Maintenance Periods and split as two 14 period days or 28 days in a given month and a total of 35 for those troubled banks who sought extensions to meet balance requirements. A bank in deficit at Maintenance Period end had to purchase cash while surplus banks sold cash. Month end is actually 28 and 35 days. Much more to Maintenance Periods such as interest paid to reserves but most simple is offered.

USD/CAD achieved 1.2864 Weekly target from yesterday’s BOC. Break point is now 1.2820 then hello 1.2500’s.

NZD/USD achieved weekly target at 0.6999. Break point for higher is now located at 0.7040.

USD/JPY achieved 108.62 target and break point for higher is now 109.31. At 109.47 should now eliminate as a break point.

AUD/USD break point is now 0.7626 and 0.7590 achieved so far. Target today is 0.7606 and a challenge to 0.7626 remains viable.

EUR/USD Weekly target at 1.1788 and 1.1824 achieved 1.1724 so far. Break point for higher is now located at 1.1914.

GBP/USD Weekly target at 1.3437 achieved 1.3347 so far. Break point for higher is located at 1.3573.

EUR/JPY break point at 128.59 was a challenge as mentioned and seen Monday when EUR/JPY traded 128.54 then dropped. Target remains 129.68 and 129.48 on a break of 128.59.

GBP/JPY remains over oversold and Weekly target remains 147.97 and traded so far 145.30.

Overall GBP/USD, EUR/JPY and EUR/USD are within about 100 pips to target and 200 pips thereabouts for GBP/JPY which is in line.


Brian Twomey