Correlation Shift: EUR/USD V USD/JPY, GBP/USD, GBP/JPY, JPY Cross Pairs

Currency Markets for the past 2 and 3 years were defined as trading 100 and 200 pip weeks and wide rangers GBP/JPY, GBP/NZD, EUR/NZD, GBP/AUD, EUR/AUD trading 2 and 300 pip weeks. Certain fleeting instances, the amount of weekly traded pips would double. Currency markets over the past month to 1 1/2 months traded double the normal ranges to 100 and 200 pip days and more for wide rangers.


GBP/JPY for example traded an extraordinary 900 pips in the last 6 trade days at an average of about 400 pips every 3 days. GBP/JPY and USD/JPY on the way up from 114.00’s and 151 to 168 averaged about 200 pips on its best days over a 31 trade day period.


The extraordinary 200 pip GBP/USD moves over past days is explained by a break of the 5 year average at 1.3100’s and a target at 1.2670. GBP/USD as usual and by explanation as a dead laggard currency pair is extremely late to the game to breaks at the 5 year average.

EUR/USD, AUD/USD, NZD/USD, USD/JPY, CHF/JPY, EUR/AUD, GBP/AUD, GBP/CAD broke 5 year averages months ago. Vital to GBP/USD is longer term averages to include the 5 year completed trade to lower targets.


Vital is GBP/JPY tracking lower to GBP/USD. USD/JPY’s 2000 pip rise in 3 months had the assistance of +99% Correlations to JPY cross pairs. Rare to Correlate at a full 99% against a top at +1% however GBP/JPY as leader of JPY cross pairs appears to signal a wholesale Correlational change.


JPY cross pairs will now change its Correlational allegiance back to anchor pairs in an extraordinary market shift. EUR/USD then runs and correlates with EUR/JPY, GBP/USD to GBP/JPY, AUD/USD to AUD/JPY, NZD/USD to NZD/JPY.


CAD/JPY will always assume opposite correlations to USD/CAD as normal market order much the same as USD/JPY to CHF/JPY.


When JPY cross pairs shift back to anchor pairs adds an extraordinary power and strength to anchor pairs to signal markets will trade and favor risk trading. The early warning is higher EUR/USD, GBP/USD, AUD/USD and NZD/USD as bottoms are here and all contain a long way to travel higher.


EUR/USD for example is deeply oversold from its 5 year average at 1.1500’s and targets easily 1.1100’s. We hold constant to EUR/USD targets at 1.1300’s and 1.1400’s. Note 1.0600’s to 1.1300’s or 600 ish pips. Perfect at the number 600 or twice 300.


By JPY cross pair correlational shifts means USD/JPY now sits and trades all alone as USD/JPY lost its main strength from assistance to JPY cross pairs. The JPY correlational shift applies to all USD, DXY and USD pairs in the EM space. The market order message is USD on the topside is finished and a top is here. USD/PLN offers an extraordinary short trade on the downside.


DXY at near 103’s is 400 pips above its top at 99.00’s. Nothing exists to DXY on a long trade as short is the only trade moving forward.


A JPY cross pair correlational shift applies to stock markets. Quite perfect to see SXP 500 at 4100’s as SPX position is at the lower end of a 12 month range from 4800’s to 4100’s or 700 points.


While GBP/USD led the charge lower to the 1.2600’s target, EUR/USD was dragged lower yet EUR/USD only traded 100 pips days. AUD/USD not only beat EUR/USD by trading more than 100 pips days, AUD/USD is the wildcard to the 5 year average targets.


AUD/USD targets 0.6800’s yet traded to 0.6900’s. Due to GBP/USD to achieve targets, EUR/USD at deeply oversold levels and JPY cross pairs at correlational shifts, AUD/USD at 0.6900;s may serve as 0.6800 target met and achieved.


USD/CAD and USD/JPY traded barely just over 100 pip days. USD/CAD was the better trade. USD/CAD is always the better trade as market leader to USD/JPY.


Using moving averages correctly as opposed to the imaginary averages employed by chartist, here’s EUR/USD targets: 1.0670, 1.0701, 1.0767, 1.0839, 1.0911, 1.1037, 1.1084.
EUR/USD contains 2 big hurdles today: 1.0623 and 1.0686 to target 1.0771. USD/JPY targets 126.61.

Brian Twomey

Contact Brian@btwomey.com

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