Gridlock: EUR V JPY and JPY Cross Pairs V GOLD, DXY and S&P’s

USD/JPY’s vital high / Low break point is located at current 108.93 and USD/JPY trades above.

The problem to currency prices is EUR/USD, GBP/USD, AUDUSD and NZD/USD also trade above high / low break points. All prices are trading in mis positions as risk assets are trading alongside USD/JPY status as non risk asset. This logjam must break to correct the market imbalance.

As noted in the December Gold forecast article, both DXY and Gold as non risk assets and currently trading above 5 year averages are also trading alongside the risk status of the S&P’s. The S&P also trades above its 5 year average. The same logjam inherent in USD/JPY Vs EUR/USD and counterparts are affected in the DXY, GOLD and S&P relationship.

Further noted in the December article was Gold at extreme prices are located from 1553.97 to 1617.76. Gold traded to 1613 then dropped to 1550’s and remains deeply overbought.

The S&P, DXY and Gold price imbalance is broken by either DXY and Gold trade below 5 year averages or the S&P’s break below its 5 year average.

Markets enter 2020 against the common theme of price imbalances as risk assets trade alongside non risk. The gridlock will eventually break as always occurs in markets then trends will develop and correctly traded markets rather than range trading.
USD/JPY

Either USD/JPY must break below 108.93 or EUR/USD and counterparts must break below its vital points.

The major effects to the USD/JPY and EUR/USD problem feeds into JPY cross pairs as all JPY cross pairs trade above high / low break levels. The logjam dilemma is not only serious but either USD/JPY or EUR/USD and counterparts must own their respective cross pairs but never both. Great moves ahead once the gridlock breaks but not before.

EUR/USD and USD/JPY current imbalanced status is sending JPY cross pairs higher and into deeper overbought territory, CHF/JPY in particular is at richter scale overbought.

EUR/USD break point is located at 1.1117 Vs EUR/JPY at 121.11 while higher must break 1.1277 and 123.73.

GBP/USD 1.2919 Vs GBP/JPY at 140.75.

NZD/USD 0.6564 Vs NZD/JPY 71.49

AUD/USD 0.6879 Vs AUD/JPY 74.96.

USD/CAD 1.3125 Vs CAD/JPY 83.01 maintains correct market status

USD/CHF 0.9792 Vs CHF/JPY 111.27 also maintains proper market order.

The most important pairs from above are anchors NZD/USD and NZD/JPY as both should lead the way for remainder pairs once respective points are broken. If NZD/USD breaks 0.6564 then risk pairs will follow then we know USD/JPY will trade higher. Also known will be the question who owns JPY crosses.

 

Brian Twomey