FX Weekly: Exchange Rates Predict Exchange Rates

As highlighted Friday, 19 of 28 currency pairs are USD pairs, moves with USD and driven strictly by USD while 9 currencies are Non USD. Of 28 currencies, 19 contain exchange rates as 1 point and 9 are distinguished by 0 point. This allows currency prices to factor its interrelationships as marriages yet also to divorce as currency prices separate and contract from each other.


How are present currency market prices running. Simple check by calculator. Tops and bottoms are most significant points. Today’s exchange rate associations may or may not comport to the same currency pairs in the future. Price and price only is the dictator.


Note for example below EUR/USD, NZD/USD and NZD/CHF equates to CAD/JPY. Normally, the relationship informs to NZD/USD and NZD/CHF tops and bottoms and perfect trades but instead factors to CAD/JPY. As NZD/USD gets moving again, CAD/JPY will be eliminated to again factor to NZD.


Overall, weekly trades are factored for interested.


EUR/USD minus NZD/CHF and EUR/USD minus NZD/USD = CAD/JPY range 89.67 to 92.41 or 274 pips.


USD/GBP or the opposite from GBP/USD = AUD/USD top. EUR/CAD divide 2 then AUD/USD bottom. Next top above USD/GBP then EUR/AUD divide 2. AUDUSD = 0.7100’s, 0.7400’s and 0.7700’s.


EUR/GBP = GBP/CAD divide 2. So EUR/GBP = 0.8507, and 10 and 15 year averages at 0.8426 and 0.8401.


NZD/JPY = EUR/NZD divide 2 = NZD/JPY top Vs CHF/GBP for NZD/JPY bottom. CHF/GBP is opposite pair to GBP/CHF.


NZD/JPY 81.18 to 80.98 .


EUR/NZD = USD/CAD divide 2 = EUR/NZD significant point. GBP/CHF divide 2 = EUR/NZD bottom.
EUR/NZD 1.6273 to 1.6174.


EUR/USD 1.1727 top = GBP/EUR or opposite as EUR/GBP.
EUR/NZD Vs GBP/NZD exchange rate spreads 2781 pips. EUR/NZD or GBP/NZD is either overbought or oversold by 181 pips.


CAD/CHF = USD/GBP. CAD/CHF currently trades below USD/GBP. 0.7456 to 0.7346.


CHF/NZD or opposite from NZD/CHF = EUR/AUD bottom
CHF/AUD or opposite from AUD/CHF = EUR/CAD top.


AUD/EUR = NZD/CHF bottom. 0.6410.
AUD/EUR trades below AUD/USD.


USD/NZD or opposite from NZD/USD = EUR/CAD bottom.
USD/AUD or opposite from AUD/USD = GBP/USD top.


CAD/CHF 0.7346 Vs AUD/USD 0.7329. Watch crossover.
NZD/USD divide by 2 = AUD/NZD top.


AUD/USD divide 2 then divide 2 = GBP/NZD top.


EUR/CHF Vs AUD/NZD. What’s the difference. CHF/EUR offers AUD/CAD top and NZD/EUR offers another AUD/CAD top.


Both CHF/EUR and NZD/AUD leads directly to GBP/NZD.


The week.


USD/JPY is overbought for the week and overbought long term while USD/CHF and USD/CAD also sits overbought. The trifecta is rarely in weekly agreement.


USD/JPY from last week still targets 113.30 from break below at 113.71. Shorts this week are located at 114.21 and 114.29.


GBP is the best category to trade as GBP/USD and cross pairs begin the week deeply oversold.
GBP weekly trades rank as GBP/USD, GBP/JPY, GBP/AUD, GBP/CHF, GBP/CAD, GBP/NZD. Only difference from last week is GBP/CHF was last and switches places with GBP/NZD.


GBP/AUD is the best trade vs EUR/AUD for the 2nd week running.
EUR/USD begins oversold with caution to longs at 1.1492.


USD/CAD last week was dictated by 1.2451 as CAD/JPY and CAD/CHF would follow. CAD/JPY assumes this week’s leadership position Vs USD/CAD and CAD/CHF as USD/CAD and CAD/CHF will follow.


NZD/USD and cross pairs remain last to weekly rankings for the 4th week running. NZD/JPY is the best from NZD cross pairs however GBP/JPY, CAD/JPY and EUR/JPY are preferred. GBP/JPY is the clear leader to JPY cross pairs.


EUR/USD Vs USD/CNY


Correlations ran last week at + 0.88 or 88%. Correlations run this week at + 0.92 or 92%. The positive correlation informs to distance as a positive correlation reveals EUR/USD and USD/CNY prices won’t travel far from each other. The relationship is negative due to EUR Vs USD as USD/CNY and EUR/USD will trade in the opposite direction to each other but not far.

EUR/USD ranged 175 pips last week to USD/CNY 308.


The Correlation must break down to factor ranges and to understand the relationship. USD/CNY Vs EUR/USD factors as 6.4093 to 6.4343. EUR/USD factors as 1.1719 to 1.1603. No changes since last week.

EUR/USD dropped from 1.1607 to 1.1400’s and USD/CNY rose to 6.4098 then dropped to 6.3700’s.


Shortest term, EUR/USD is 161 pips off its range while USD/CNY is off kilter by 296 pips. Both EUR/USD and USD/CNY are deeply oversold to begin the week.


The assumption is USD/EM and EUR/EM correlations run high and positive and explains why both run weekly to oversold, overbought and neutral over the past 2 months. The ranges are off kilter. Correlations must drop in order for USD/EM and EUR/EM to trade more correctly to ranges.

Brian Twomey