FX Next Week

The Fed Funds rate at 4.33 and 31 year monthly average at 2.6303 reveals 170 missing points. The nearest average to 4.33 on speculation is located at the 50 year monthly average. DXY at 96.00’s is located at the 50 year monthly average.


WTI written June 2021 at 68.00 was located at the 23 year monthly average. WTI then traded to 130.00’s or the 50 year monthly average. WTI was located dead center to trade the 25 to 50 year monthly average or drop substantially to break monthly averages at the 14, 10 and 5 year. WTI decided to follow DXY and Fed Interest rates higher on a pure speculative rampage.


WTI began its rise from 29.00’s in 2016 and 6 years later achieved 130.00’s at the 50 year monthly average.
Stock markets, Gold, Silver, yields are unaffected traditionally by such lofty levels at 50 year monthly averages however speculation exists to Agricultural commodities and current location for Corn and Wheat in particular as most vital to world commodities.


Current markets for all financial instruments trade at extraordinary and rarely seen levels and at crucial economic and political junctures. While Inflation and interest rates trade at exorbitant levels, political systems around the world are moving towards authoritarianism. The political system must rectify in order for better economic times or the economic system will stagnate for years.


USD/JPY and the Lost Price


The lost price as I term this phenomenon materializes about every 2 – 3 years. A lost price may go missing up to 800 and 1000 pips for currencies, 500 to 700 points for stock markets. Last time the lost price traded perfectly was 2020 and 2018. And now 2022 and the USD/JPY and JPY cross pair examples were demonstrated. USD/JPY to achieve another Lost Price maybe 2024.


Never dismiss EM currencies as this avenue to lost prices is a treasure of easy and profitable trades due to far wider ranges than our 28 currency pairs normally traded.


The Week


Not only did USD/JPY achieve +700 pips on the downside but 134.00’s concluded yesterday for an additional +400 pips from 130.00’s and 1100 ish total pips.


USD/JPY ranges from 125.64 to 136.39 and 136.91. For USD/JPY to go missing again as a Lost Price, count 600 pips from 136.00’s to factor 142.00’s. Shorts would begin at 142.00’s and higher.


USD/JPY’s target remains 129.24. USD/JPY is neutral at 133.82. The above top price and overbought is 135.34 or the range from 133.82 – 135.34. Below 133.82 to deeply oversold at 132.30 or the range from 132.30 – 133.82. Short strategy is the best move.


EUR/USD


EUR/USD trades from 1.0390 and 1.0408 to 1.0847. Higher must break 1.0689. Above 1.0847 targets 1.1001. EUR/USD at 1.0710 is deeply overbought and targets 1.0609 then 1.0509. No dramatic moves are expected for EUR/USD except to range trade.


GBP/AUD


GBP/AUD traded from the top at 1.8200’s to 1.7700’s as written. To move significantly higher, GBP/AUD must break 1.7988, 1.8011, 1.8082 and 1.8152. Longs begin at 1.7792 and 1.7755.
GBP/AUD above 1.7825 targets easily 1.7927 and caution at 1.7988. Below 1.7825 targets 1.7700’s and long. Nothing special exist to GBP/AUD as a wide range currency pair as the wide range function is severely under performing.


The 500 pip move for GBP/AUD was nothing in comparison to 1000 pips as a normal trade. GBP/AUD lacks ability for a 1000 pip trade as the new 2016 currency market arrangements limited GBP/AUD’s wide range status.


GBP/USD


GBP/USD trades from 1.1987 and 1.1959 to 1.2535. The longer term target is located at 1.2324. Both 1.1987 and 1.1959 are dropping lines and informs GBP/USD lower is correcting from 1.2400 highs. GBP/USD below 1.1959 becomes lost yet targets are located at 1.1916 and 1.1873. Next week targets are located 1.2132. Above 1.2132 becomes overbought.


AUD/USD


AUD vital line is located at 0.6710 while AUD targets 0.6779 or 0.6641. AUD/USD vital line last week was 0.6712 and AUD/USD closed at 0.6711.


NZD/USD


NZD trades safely above 0.6212. Overbought begins at 0.6362.


GBP/JPY


GBP/JPY trades from 156.35 to 163.25 and 163.54. Targets are located at 159.57, 159.25 and 157.59. GBP/JPY trades deeply oversold and targets next week are found at 161.67 and 162.60.
Watch EUR/JPY higher at 142.31 while CAD/JPY targets easily 99.40 then 100.14. The big 3 JPY cross pairs to trade are GBP/JPY, EUR/JPY and CAD/JPY.


EUR/AUD, EUR/NZD, GBP/NZD


Same story as last report to overbought at 1.5900’s and oversold achieves below 1.5812. Tops for EUR/NZD and overbought at 1.6900’s is also the same story as last week. GBP/NZD at 1.9068 trades massive oversold and targets 1.9129 easily. Much divergence exists between oversold GBP/NZD and neutral EUR/NZD.

Brian Twomey

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