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

The common theme to currency market prices reported last week at 75 to 200 pip ranges held as EUR/USD for one example was knocked off its upward trajectory by Monday’s Italian elections and dived 138 pips to 1.1510 only to regain its correct weekly path to rise 214 pips to 1.1724.

The second theme as USD pairs lower to correct while non USD pairs higher also held last week and explains why EUR as one example rose 214 pips from its Italian lows. It explains USD/CAD’s 200 ish pip drop to 1.2800’s on Thursday’s BOC day and USD/JPY’s 171 pip dive from 109.80 to 108.11.

Currency markets this week will trade 50 and 150 ranges as the USD correction lower and non USD higher theme holds into its second week. Why the drop to 50 and 150 pip ranges is due because most vital break points to significant averages becomes the focus for a vast majority of currency pairs. Currency prices either break or long rejection candles are seen. Clearly, an interesting week is ahead.

The favorite pair again this week is clearly USD/CAD as overbought CAD desperately wishes to travel higher but CAD averages are moving against higher prices. EUR/USD and AUD/USD will trade strongly as both pairs move higher followed by GBP/USD and GBP/JPY. USD/JPY and EUR/JPY trade again as usual in their same old tired ways while EUR/AUD as inclusion this week is seen as nothing special. Encouraging to the EUR/USD Vs USD/JPY relationship is early beginnings to the first price divergence seen since Feb 23rd.

EUR/USD. To understand EUR/USD is to view its overall price trajectories in 300 pip ranges as EUR/USD begins from upper 1.1200’s and 1.1300’s to 1.1600’s then 1.1600’s to 1.1900. Above 1.1900 goes to 1.2200 and 1.2300 then 1.2300 to 1.2500 and 1.2700. Long and short term Hedges now established.

EUR/USD last week targets were located at 1.1788 and 1.1824 and EUR/USD traded to 1.1727. This week targets are located at 1.1704 and 1.1817. EUR/USD most vital break point for significantly higher is located 1.1896. A break higher then targets 1.2080’s and lower 1.2100’s. Vital supports and good long points are located at 1.1634, 1.1670 and 1.1687. EUR/USD to the extreme is located at 1.1572. Long only strategy applies to EUR/USD for the week.

USD/JPY break point is located at 109.30 and targets 108.57 on a further break below 109.46. USD/JPY’s problem this week is a dark area developed from 109.46 to 110.01 and in between is 109.73. Above 110.01 exists 110.27 and 110.42. Overall, USD/JPY is a short only strategy to target 108.57. At 109.30 and 109.73 establishes entry. Longer term, a deeper USD correction could see USD/JPY easily trade to 107.76 and 107.25.

USD/CAD break point to target 1.2740 and longer term 1.2571 is located at overbought 1.2832. The problem at 1.2832 is its well protected by 1.2876, 1.2854, 1.2845 then 1.2803. An off sync economic announcement maybe required to push CAD lower to break 1.2832. Lower to challenge 1.2832 is located at 1.2922, 1.2909 then CAD is clear to 1.2800’s. Above, last week’s 1.3003 is now located at 1.2996. As was the strategy since March, short only is the only way forward.

GBP/USD. Last week’s target at 1.3437 traded to 1.3362 and like EUR/USD fell a few pips shy as Monday’s Italian election debacle knocked GBP a few pips off course. This week’s taget is a few pips higher than last week at 1.3462. GBP’s break point for higher to target 1.3700 and 1.3800’s is located at 1.3558. Only points below and good long entries if seen are located at 1.3277 and 1.3232. GBP averages are rising and this is a good indication for a much higher GBP over coming weeks.

GBP/JPY main break point is located at 148.16 and a break above targets 150.19. Targets this week are located at 147.23 and 147.69. GBP/JPY to 147.23 should be an easy ride and overall GBP/JPY as well as GBP/USD contain astounding potential for miles higher. Only points below and good long points if seen are 146.58 and 145.61.

EUR/JPY should view as 122.00 to 125.00 then 125.00 to 128.00 and 128.00 to 131.00’s. The main break point to target 131.00’s is located at 130.01. EUR/JPY will find severe resistance at 130.51, 130.84 and 130.95.

Higher for EUR/JPY last week as mentioned would entail a struggle as 128.59 had to break to target 129.68. EUR/JPY traded to 128.52 then dived on Italian election concerns.Target this week is 129.44 on breaks of 128.01, 128.53, 128.72 then 129.11. Most important in this series is 128.53 to travel to target.

AUD/USD break point is located at 0.7624 to target 0.7691 and 0.7711. AUD must break first 0.7613 then home free to 0.7624 and higher. Last week AUD traded to 0.7592 then retreated to 0.7514 and closed at 0.7568. AUD was expected to break 0.7624 last week and this week contains a far better shot. Long only for the week is the only strategy as AUD will trade against a strongly bullish tone. Economic news this week contains Inflation, GBP, Retail Sales and RBA Tuesday. Long any drops to outside price events will offer great opportunities.

EUR/AUD break point is located at 1.5603. EUR/AUD will struggle at 1.5541, 1.5571 and good quick shorts if seen to target 1.5454. Overall nothing exciting exists in EUR/AUD. The import to 1.5603 break higher would see AUD/USD much lower and also to erase any gains seen above 0.7624. The preferred strategy is long any drops from lower 1.5300’s then target 1.5454.


Brian Twomey