FX Weekly: EUR and Cycles, GBP, JPY Targets

Tough week ahead for currency markets as trade selection is most vital. From 13 currency pairs traded weekly over many years, here’s the best, EUR/USD, AUD/USD, CAD/JPY, USD/CAD, EUR/NZD. For EUR/NZD trades due to oversold.


USD/CAD is in contention to oversold CAD/CHF and fairly neutral CAD/JPY while EUR/USD and AUD/USD trades are clear. USD/CAD’s fate is decided by 1.2451 and this level will lead CAD/CHF and CAD/JPY movements.


USD/CHF begins the week deeply oversold as well as counterparts GBP/CHF, AUD/CHF, NZD/CHF and CAD/CHF. The problem with CHF cross pairs is all are off kilter to the respective universe. AUD/CHF is off kilter to AUD/USD, NZD/CHF to NZD/USD and CAD/CHF to USD/CAD. Oversold GBP/CHF remains in sync to GBP/USD only because GBP/USD is oversold.


The next problem with USD/CHF and CHF cross pairs is all lack range. CAD/CHF, AUD/CHF and GBP/CHF are the best trades to profit a few pips but don’t look for any exciting movements as ranges won’t allow good moves.


Tough week leads to the month long problem to EUR/USD Vs USD/CAD at 5 year averages and GBP/USD Vs EUR/GBP. USD/CAD gained upward moves away from 1.2217 while EUR/USD 1.1490 and rising decides EUR/USD.


EUR/GBP sits just above 10 and 15 year averages now at rising 0.8424 and 0.8401 while GBP/USD pretty much is allowed to float from 1.3412 to 1.3800’s. EUR/GBP begins the week slight overbought while GBP/USD and all GBP pairs sits deeply oversold to include GBP/EM.


GBP/EM


Take your pick, throw a dart and long deeply oversold, GBP/CNY, GBP/CZK, GBP/DKK, GBP/MYR, GBP/PLN, GBP/RON, GBP/SEK, GBP/SGD. GBP/TRY sits overbought while GBP/ZAR begins the week fairly neutral.


EUR/USD and 2500 Pip Cycles


Long term views to currency prices is factored as 2500 pips and certain pairs less but not much off 2500. For EUR/USD 2500 is to much unless a bombshell year occurs. Generally 1500 to 1800 pips is a good EUR/USD measure.


When EUR/USD bottomed at 1.0600’s in year 2020, EUR/USD traveled 1700 pips to 1.2300. For 2021, EUR/USD dropped 800 pips from 1.2300’s to 1500’s or 1/2 of 1700.


The EUR/USD target on a break of 1.1490 at the 5 year average is 1.0800 or 1500 pips from 1.2300. EUR/USD at present 800 pips is at the halfway point. Higher at 400 pips takes EUR/USD to the 10 year average and massive resistance at 1.1900’s and 1.2027 when the downtrend begins again.


November /December begins EUR/USD seasonal downtrends to last until May and June then the uptrends begin to November / December. EUR/USD trades higher then we continue the short only program or breaks at 1.1490 and trades to 1.0800’s. Then we’re long to around 1.1300’s and a break takes us to 1.2500’s or 1700 pips.


EUR/USD higher by 400 pips would take USD/JPY lower to our 109.00 target from current 113.00’s.


Break down 2500 as 1250, 625, 312, 156. Normally our currency pairs are trading within the context of 312 pip ranges between 2 vital support and resistance points. Current Averages broke 312 to surround 156.


This is the case for EUR/USD 1.1400 to 1.1600, NZD/USD 0.6800 to 0.7200, AUD/USD 0.7300 to 0.7400’s, USD/CAD 1.2200 to 1.2400’s. Proper for cross pairs to trade higher than anchor pairs by about 2 times yet cross pairs are trading the same pip amounts as anchor pairs.


The concept of volatility and market price movements is at the lowest depths in many many years and I define as dead markets. Prices require breaks to get moving again but 5 and 10 year averges are holding up progress. Know 312 and 156 then this defines weekly trades count by fingers. EM markets are no different as ranges disintegrated. Does this condition remain as we trade at the 50th year since the free float or breakout and trade back to normal is an ongoing question.


The early warning to 156 and problems is deeply oversold USD/CHF without any range ability and CHF cross pairs oversold and not in sync to anchor pairs such as AUD/CHF and AUD/USD.

            CHF/JPY and 2500 Pips

CHF/JPY bottomed at 106.00’s in 2018 and traded to current 125.00’s or 1900 pips or roughly 630 pips per year. At 1/2 of 1900 or 900 pips takes us to our target at 116.00, 115.00’s. Not only is CHF/JPY overbought from averages, short, medium and long term but shorts is the only strategy.


Wide Rangers GBP/CAD, GBP/NZD and EUR/NZD.


GBP/CAD broke the 5 year average at 1.7067 and traveled down a deeply oversold track to current 1.6700. The target on the 5 year is 1.6600’s and higher must break 1.7067 and 1.7093 to target 1.7202. Long term targets are much higher for GBP/CAD when 1.7067 breaks.


EUR/NZD broke the 5 year at 1.6400, traded to 1.6100’s. Long term targets are located at 1.6500’s and 1.6600’s when EUR/NZD breaks the 5 year.


GBP/NZD 1.9137 at the 5 year must clear then next 1.9343 and headwinds at 1.9400’s.


USD/JPY targets to 114.27 and 114.36 then targets 113.40.


EUR/EM V USD/EM


Added to a tough week is absolutely nothing is available to trade in EUR/EM Vs USD/EM. EUR/CZK is deeply oversold along with EUR/CNY and overbought to EUR/TRY. USD/EM is slightly overbought USD/DKK and USD/HRK while overbought USD/TRY.


Most EUR/EM and USD/EM currencies begin the week at vital breaks to include BRL.

Brian Twomey