EUR/USD V DXY February Levels and Targets and Interest Rates

If DXY and Fed interest rates were excluded from markets then no such concept as currency markets would exist. If DXY and Fed interest rates were excluded from American markets then all financial instruments associated with DXY and Fed interest rates would trade as a wild west concept or volatility x 10 x 100 X unknown.

DXY and Fed interest rates are the vital components to not only force currency and market prices to move but both dictate how far and to trading concepts as ranges and targets. As Fed interest rates are released daily, all central banks comply to interest rates to report the exact same interest rates and to trade alongside Fed interest rates.

Now we have a market price for currencies and all financial instruments against known ranges and targets.

DXY and EUR/USD from a day trade perspective shares a 7 and 8 pip relationship. Not much difference except each are total opposites. The minimal DXY and EUR/USD must trade on a day trade is 15 points. If DXY drops 8 pips, EUR/USD trades higher by 7 pips. If DXY trades higher by 7 pips then EUR/USD drops by 8 pips.

The DXY and EUR/USD relationship is permanent unless central banks open wider to interest rates. Central banks won’t release their total interest rate control. The direction for central banks is to further compress interest rates to flatten daily ranges.

Daily ranges are flattened by the interest rate parity curve to move by 0.01 and 0.02 daily and to in turn constrict interest rate maturities to more than tight ranges.

Daily ranges currently compressed to the lowest common denominator since the 1972 free float.
From a maximum perspective. A currency price must trade at least 50 – 60 pips per day. This accommodates for DXY to SPX at 30 and 40 ish points, XAU/USD and Gold at 20 ish points and WTI at 2 points. The VIX is gone and may never come back to life as it trades about 1 1/2 points per day.

DXY and EUR/USD each moved 1300 ish pips by averages at every 200 pips with 100 pip targets. As targets materialized, new averages developed. EUR/USD and DXY’s best moves occurred at breaks of 109.00’s and 0.9800. Once EUR/USD broke 1.0500’s and DXY 103.00’s, both price movements died.
For the month of February, EUR/USD becomes overbought at 1.1040 and a short strategy implemented.

EUR/USD requires 2 big breaks at 1.0973 and 1.0995. At 1.0995 can trade easily and targets back to 1.0800’s. Look for targets at every 100 pips.

DXY becomes oversold at 100.50 and 99.46. The month of February may not see the big 99.00’s break yet DXY has every ability to challenge 99.00’s.

The overall EUR/USD and DXY moves have been miserable and meager as each failed to trade not even close to full potential. Except for the month of November.

Monthly Ranges January 9

From January 9 monthly ranges. USD/CAD 1.3736 to 1.3335. Actual 1.3684 to 1.3298.

GBP/USD 1.1946 to 1.2490. Actual 1.1840 – 1.2447. NZD/USD 0.6187 to 0.6554. Actual 0.6190 to 0.6529.

USD/JPY 135.70 to 129.78. Actual 134.76 to 127.20. AUD/USD 0.6588 to 0.5932. Actual 0.6687 to 0.7141.

EUR/NZD 1.6267 to 1.7075. Actual 1.6670 to 1.7038.

Brian Twomey

FX Weekly: Levels and Targets

DXY traded 95 pips last week, 136 in the prior week and 186 pips 3 weeks ago. DXY’s 1400 pip drop from 114.00’s over the past 4 months was fairly easy as DXY traded above 50 year monthly averages. Corrections higher were shallow as averages materialized every 100 pips above the current price.
DXY is no different today as it was 4 months ago. Averages are positioned every 100 pips from 102.00’s to 109.00’s and 109.00’s to 114.00’s.

Partial explanation to a 95 pip trade week was DXY now approaches 99.97 and 98.89 then 96.00’s and 95.00’s. The overall bottom from current analysis is located at 92.00’s.

On the opposite side is EUR/USD and rising averages. The January 12 lineup 1.0457 to 1.0847 or 390 pips Vs today 1.0596 – 1.0898 at 302 pips. While EUR/USD bottom side averages at 1.0500’s won’t break anytime soon, EUR/USD top averages gain no traction to propel EUR/USD higher. DXY is required to move lower in order for EUR/USD prices and averages to travel higher.

EUR/USD failed to hold the range from 1.0800’s to 1.1100’s as bottom side averages became deeply overbought. EUR/USD at current 1.0596 trades perfectly neutral.

EUR/USD Targets

Above 1.0898 targets 1.0942 and 1.0968 and easily achievable. Next for EUR/USD targets are located at 1.0995, 1.1038 and 1.1077. EUR/USD at 1.0995 becomes overbought and adoption to a short only strategy.
EUR/USD bottom at 1.0829 holds first support then 1.0705. The overall target reported in December at 1.1001 holds. December lows held at 1.0300’s.

Driving markets is DXY trading lower by 100 pip increments to EUR/USD’s rise by 100 pips. DXY’s failure to continue lower then EUR/USD could easily consolidate in a 1.0596 to 1.0898 -1.0900 range. DXY’s break at 99.00 and 98.00 then EUR/USD automatically travels much higher and topside averages continue a slow climb higher.

The Week

The commonality to EUR/USD, AUD/USD, NZD/USD and GBP/USD is bottom side averages rose significantly over the past month while topside average remained stable.

USD/JPY trades 125.04 to 133.68 or an 864 pip range. Previous range was located from 125.00’s to 135.00’s. or 1000 pips. USD/JPY continues a slow grind lower as it follows DXY’s descent. DXY’s break at 99.00;s and 98.00’s then lower for USD/JPY to challenge 125.00;s.

USD/JPY opens the week oversold and short opportunities.
GBP/USD trades 1.2114 to 1.2578 or 464 pips. December 22, GBP/USD traded 1.1988 to 1.2542 and 1.2551 or 554 pips. GBP/USD trades overbought from 1.2114 and reveals 1.2500’s remain elusive to a break anytime soon. Short highs is best strategy.

JPY Cross Pairs

JPY cross pairs trade oversold to match oversold USD/JPY.

EUR/JPY 135.00 ‘s to 141.47. GBP/JPY 156.30 to 161.47, CAD/JPY 95.11 to 99.16, GBP/JPY 156.30 to 161.77.

AUD/JPY at 92.00’s trades far to high especially in relation to counterpart JPY cross pairs. Look for a break at 91.79 for shorts and a lower price.

AUD/USD and NZD/USD

AUD/USD 0.6874, 0.6992, 0.7138 and 0.7196.
NZD/USD trades overbought within current range at 0.6316 to 0.6638.

USD/CAD and Cross Pairs

USD/CAD contains serious range problems. Higher must break 1.3394. GBP/CAD trades 1.6224 to 1.6700’s and 1.6800’s.
AUD/CAD trades massive overbought and targets 0.9389
EUR/CAD trades the exact same as last month. EUR/CAD middle 1.4400;s decides EUR/CAD 1.4200’s or 1.4600’s and 1.4700’s.

GBP/AUD Vs EUR/AUD

GBP/AUD trades severely overbought. Trade strategy remains long to target easily 1.7503. Many rounds of shorts exist all week.

EUR/AUD long this week matches longs to GBP/AUD.

EUR Vs EM

EUR/HUF and EUR/RON in the EM space trade deeply oversold and a reat long opportunity. Remainder EUR vs EM trades dead neutral.

Brian Twomey

FX Next Week: GDP, USD/CAD, CAD/MXN, Imports

GDP today last 3.2 and 2.6 consensus. While GDP averages may not trade overbought or oversold. at 3.2 and 2.6 remains far to high an overall price as 2.6 is located between the 10 and 11 year averages from 2.29 to 2.37.

The Atlanta Fed Now offers 3.5. The 3.5 is located at averages 3 year, 6 and 7. The 7 year average is perfect to the Atlanta Fed’s forecast. But still to high an overall price.

GDP’s proper location and any economic release is between the 1 – 5 year average. The 3.2 and 2.6 is today located above the 10 and 11 year averages and signifies to high a price.

The Atlanta Fed forecasts GDP by updates to each economic release then predicts GDP by using weather as a forecast tool. The weather aspects verifies my claim over years to purchase weather books to learn and understand a market price. Weather is statistics in action and the older the books the better, less expensive and more examples to Statistics.

In market trading is spoken ranges. In Weather books is taught the breakdown to ranges as Terciles, Quintiles, Quartiles, Deciles for 3, 4, 5 and 10. The market price is now scaled from 3 to 10 but overall must scale is 1 to 10.

Easier than the Atlanta Fed is obtain the GDP data from the RBNZ. The RBNZ will post today’s GDP data tomorrow so traders are prepared for the next GDP release. AS well GDP is the insight to all economic releases.

The data allows for negative GDP forecasts as done in July.

Next Week

AUD/USD achieved target at 0.7082 as written January 9. Ranges are located at 0.6831, 0.6986 to 0.7135.
EUR/USD ranges 1.0579 – 1.0892 or 313 pips and 1.0892 to 1.1127. The range from 1.0579 to 1.0892 is slowly compressing as the range lost about 40 pips this week.

EUR/AUD big break for higher is located at 1.5446 and oversold begins at 1.6267.

GBP/AUD as the better trade to EUR/AUD remains deeply oversold and targets 1.7546.
GBP/AUD trade strategy is the same as 2 weeks ago to long any price at 1.7300’s and 1.7400’s. Each trade long should contain a 50 pip profit and 3 and 4 rounds of longs exist.

GBP/USD trades 1.2096 to 1.2551. GBP/USD must begin a more concerted process to break 1.2551 or GBP/USD drops to low 1.2300’s and high 1.2200’s.

GBP/JPY big break at 156.29 moved higher by 16 pips in 2 weeks. GBP/JPY ranges from 156.29 to 161.78.

EUR/JPY lower on a break at 141.46.

USD/JPY trades oversold and targets higher at 130.03. Any price over 130.03 is a bonus to shorts.

USD/CAD, CAD/MXN and Imports

USD/CAD trades in a 300 pips range from 1.3300’s to 1.3600’s and fails to trade alongside DXY.

USD/CAD is driven by Import Prices to the United States. Imports hit a 2020 April low at -6.8. USD/CAD followed the continuous import price drop from -1.3 in February 2020. Then began a slow rise.

CAD/MXN skyrocketed from February lows at 13.97 to 18.17 highs in April. Then began the slow descent.
Import prices trade dead center from March 2022 highs at 13.0 to -6.8 at April’s lows.

Next Import price release is scheduled for February 17.

USD/CAD big break is located at 1.3412 and CAD/MXN at 14.40.

Brian Twomey

FX: 300 and 600 Pip Ranges

DXY began January 2022 by breaks higher at the 95.00 and 96.00 averages at 5 an 50 year then traveled 1900 pips while EUR/USD broke the 5 year average at 1.0800’s and eventually 50 year.

EUR/USD traded 1300 pips to 95.00’s Vs 1900 for DXY or a difference of 600 pips. DXY broke January while EUR/USD broke below 1.0800’s in April or a difference of 3 months.

EUR/USD achieved 95.00’s in 5 months while DXY traded to 114.00’s in 8 months or a difference of 3 months.

EUR/USD 5 year average is located at 1.1340 and the 50 year within the vicinity.

EUR/USD currently trade a 240 pips range from 1.0885 – 1.1125 or a 298 pip range from 1.0587 to 1.0885.
AUD/USD trades 0.6830 to 0.6980 or 150 pips and 0.6980 to 0.7133 or 153 pips. AUD trades 1/2 to EUR/USD ranges but 303 pips from 0.7133 – 0.6830 or the exact same as EUR/USD.

DXY monthly averages posted September from 1 year to 50 line up as follows:

1 Year 99.67
5Y = 95.69
10Y =92.83,

15Y =88.16
20Y = 88.41
25= 92.02

30Y = 91.64
35Y = 91.62
40Y = 95.75

45Y = 95.81
50Y = 96.43

From 99 to 96.00 or 300 pips, 95 to 92 or 300 pips, 91 to 88.00 or 300 pips. All averages are valued at 1100 pips or 1/2 at 550 or 275 pip intervals.

SPX from December 14 traded a 240 point range from 3774.69 to 3534.40. . SPX broke above 3774 to trade highs at 4039.16 or 264 pips.

EUR/USD range on a 5 year average is 600 pips and 900 on a 10 year average or a difference of 300 pips.
All trading life regardless to any financial instrument begins at 3 and 6 and 300 and 600 to signify ranges and targets.

EUR/USD target reported in December is 1.1001 between a 300 pip range at 1.0885 to 1.1100;s but EUR/USD was forced to break the first 300 pip range from 1.0500’s to 1.0800’s for a 600 total or 300 X 2 ranges.

Ranges at 3 and 600 derived from the 3 month and 6 month interest rate first introduced in the 1930’s. Most vital is the 3 month as the first constant to markets. The 3 month rate held as a constant in the 1940’s as the Fed began interest rate control to the 3 month rate so inflation would trade beneath.

As markets became settled in the modern day, 300 and 600 ranges became a main component to trade markets and view prices on a long term basis. The common theme to prior long term trades posted over many past years is 600 pip targets. The recent JPY trades all achieved 700 pips or a 100 pip bonus.

On a daily trade basis, prices trade 3 and 6 intervals to replicate daily interest rate moves.

The concept to 3 and 600 will remain a constant to markets for years and possibly decades in the future.

Brian Twomey

FX Weekly: GDP, EUR/USD and Trade Levels

DXY traded to 101.54 lows last week and closed 101.99 at the previous week’s low. Highs achieved 102.90 inside a 136 pip trade week. DXY’s vital levels at 102.95 and 103.29 held yet brought markets and prices directly to the brink.

DXY’s 102.90 allowed EUR/USD to break 1.0866 and trade to 1.0886, AUD/USD broke 0.6977 to trade 0.7062 and NZD/USD 0.6458 traded to 0.6529. GBP/USD traded to 1.2435 highs to further challenge the break at 1.2551.

DXY’s important levels this week are located at 102.21, 102.75, 103.06 and 103.57. From low 103.00’s, averages are positioned every 100 ish pips above and places DXY on a continuation to short only strategies.

GDP reports Thursday. GDP defined is 3 letters and factors the exact same moving averages as DXY or EUR. GDP is known as an economic release while EUR or DXY is classified as a market traded document. The difference between GDP and EUR/USD is ranges as GDP ranges are tiny in relation to EUR and DXY.

As reported from the RBNZ as they post GDP numbers after every release, GDP numbers 4.05, 3.89, 3.81, 3.73, 3.65. 3.58, 3.52, 3.45, 3.33. The Atlanta Fed holds at 3.51 and above 3.2 from Q3 2022.

The problem to Thursday’s release is GDP averages from 1 to 11 years trades in a tiny range as average are neither overbought or oversold but contain targets within 3.89 to 3.45 and 3.33.

No surprises are expected however the consensus estimate at 2.8 assumes a break at the 11 year average at 2.29 to then place GDP’s next release in February within 2.39 to 2.37 and 2.05.

EUR/USD Vs USD/EUR and DXY

EUR/USD trades a range from 54 to 108 daily pips Vs USD/EUR at 47 and 94 pips. Very few EUR/USD pips trade on any trade day. DXY trades 51 or 102 daily pips yet EUR/USD was constructed as opposite USD and driven exclusively by USD.

The Week

We’re cautious this week to a long USD as USD/JPY and USD/CAD and short non USD strategy particularly when EUR, GBP, AUD and NZD trade just below vital levels. Without breaks above significant range points to begin a new 300 pip range and trend then severely overbought range points at below averages warrants shorts to EUR, AUD, NZD and GBP.

Despite shorts, best short targets are located at 120 to 150 pips. EUR/USD for example targets 122 pips below to 1.0732. The DXY trend lower and 96.00 at the 50 year average is to powerful a downtrend to warrant a EUR or non USD correction to travel much lower than 120 and 150 pips. More than 150 pips assumes DXY trades to middle 103.00’s.

DXY Levels: 102.21, 102.75, 103.06 and 103.57.

EUR/USD trades 1.0547 to 1.0882 or 335 pips and no changes from prior weeks. Next above 1.0882 is located 1.0918 and 1.0933.

USD/JPY trades from 125.13 to 133.96 and 134.54. While 125.13 holds fairly steady over the past month, USD/JPY upper averages dropped about 100 pips from 135.00’s. USD/JPY above averages will continue a slow drop lower.

JPY Cross Pairs

We’re cautious to USD/JPY longs and JPY cross pairs this week and view the best trades as CAD/JPY,

GBP/JPY and AUD/JPY as a distant 3rd. NZD/JPY is least favored especially over past months as NZD/JPY lacks range and without a clue to weekly moves except to follow AUD/JPY. EUR/JPY also lacks excitement as EUR/JPY begins the week dead neutral without a purpose. Best NZD/JPY and EUR/JPY strategy is short highs and long lows as both will follow leaders GBP/JPY and CAD/JPY.
The attraction to GBP/JPY and CAD/JPY is ranges offer movements, best profit opportunities and trade signals are fairly clear.

GBP/JPY 156.16, 159.30, 161.39 and 162.45.
CAD/JPY 95.13, 99.83 and 100.81.

EUR/JPY 135.27, 140.93 and 141.10.
AUD/JPY 86.92, 91.25 and 91.32.
NZD/JPY 80.45, 82.21, 83.97 and 83.99.

Above targets for the week are located in the same EUR/USD range as 120 and 150 pips.

AUD/USD and NZD/USD

AUD/USD 0.6819, 0.6977 and 0.7132. Next above 0.7027.
NZD/USD 0.6277 to 0.6469. Next above 0.6484 and 0.6492.

GBP/USD trades in wide ranges from 1.2061 to 1.2306 and 1.2551.

GBP/AUD 1.7688 to 1.7999.

USD/CAD over the past 2 months trades 1.3300 to 1.3500’s and 1.3600’s. Until the 1.3300 range breaks to target 1.3200 and final at 1.3100, the range trade remains best strategy.

Trade Ranks

EUR/USD, USD/JPY, AUD/USD, AUD/JPY, EUR/AUD, EUR/CAD, NZD/USD, CAD/JPY, USD/CAD, EUR/NZD, EUR/JPY, NZD/JPY.

Best overall: EUR/USD, USD/JPY, AUD/USD, EUR/CAD, NZD/USD, CAD/JPY, USD/CAD.

GBP Best trades: GBP/USD, GBP/CAD, GBP/AUD.

Brian Twomey Contact: brian@btwomey.com

History of NFP

A larger extension exists to this article but can’t find it on site here. This article was written in 2017? so slight difference to overall numbers.

History of NFP

Non Farm payrolls began reporting in 1939 with passage of the 1938 Fair Labor Standards Act to also give us a maximum 44 hour work week and Minimum Wage that began at 25 cents per hour.

One aspect regarding Non Farm Payroll releases is the incredibly large Standard Deviations that accompany this release. It was devised in this manner to allow reported wide ranges month to month.

Participation Rate. Began January 1954 as a formal release. From January 1954 – August 1969, the Participation Rate ranged between 58.0 – 59.0. Only 4 times was 57 seen during this period and 3 of those times was in 1954. 58.0 was seen 112 months during this 180 month total and a slight bit higher than half of the 90 month average.

From the latter part of 1969 – 1973, the Participation Rate steadily increased to reach first ever 60.0 and began a slow climb to current 62.8. But 62.8 is quite low historically and hovered in the 62 range from 2012 – 2014. Year 1984 saw the highest ever since release inception to 64.0 while the 1990’s experienced 67.0.

Employment Population Ratio. Began in 1954 at 55.5 and again saw a steady increase to present 58.0. But 58.0 is off from historic 64.0 and 65.0 highs between 1996 – 2006. From 2009 – 2014, the average reports at 59.0.

Seasonal Employment. Began in 1954 at 53,000 persons and again a steady rise to highest ever 120,003 in December 2007. Today employed accounts for 117,186. The numbers exploded from 2000 – Present and never saw a low of 100,000.

Unemployment Levels. From 1954 and 2000 lows, Unemployment levels ranged between 2000 – 5,000 until 2009 when Unemployment exploded higher to first ever 100,000. Today Unemployment is 5872ish

Unemployment Rate. From 1954 – Present, the Unemployment Rate ranged between 3.0 lows – 9.0 in 2009 and today is 4.8.

Not in Labor Force. From 1975 – Present, the figure bounced between 51,000 – 73,000 highs but has seen a steady increase over the years. A possible reason is the introduction of Unemployment Insurance beginning in the late 1960’s then the pile on Bills to accompany disability, Unemployment extensions and Disaster Relief.

Union Membership. From 1983 – 2014, membership dropped from 17, 717 to current 14,576, 11.1% of the workforce are union wage workers V 20.1% in 1983. Union membership has seen a steady decline from first reported in 1983. In terms of actual workers, today 129,000 V 140,347 in 1983.

Federal Government. Totals workers in the Federal Government 2, 744, 931. A few of the highest

agencies. Total Postal workers 579,000, Homeland Security 196,799, Natural Resources 178,000, police Protection 192,21

Brian Twomey

GBP/CAD and EUR/AUD

GBP/CAD as written December 13: GBP/CAD trades from 1.6392 to 1.6767 or 1.6767 and 1.6892 to 1.7300’s.Today and 1 month later, GBP/CAD trades from 1.6468 to 1.6796 or 1.6796 to 1.6912 and 1.7095.

The larger range is located from 1.6146, 1.6468, 1.6796, 1.6912, 1.7095.

Overall, GBP/CAD trades in a range from 1.6448 to 1.6796. At 1.6448, GBP/CAD’s price is oversold and low while GBP/CAD becomes to high at 1.6796. To high at 1.6796 informs GBP/CAD will struggle to not only break but sustain its price above 1.6796.

Any price below 1.6511 then longs apply to target the range above 1.6581 to 1.6796.

EUR/AUD as written December 14th, EUR/AUD averages are located at 1.5543 and 1.5576 above and below at 1.5382 and 1.5364.

Today’s averages are located at 1.5381, 1.5407, 1.5469, 1.5598, 1.5609. Best trade strategy is short high 1.5700’s and low 1.5800’s to target 1.5686.

As EUR/AUD fails to overbought and oversold concepts, EUR/AUD’s price at 1.5400’s and 1.5300’s is to low and and will fail to maintain lower levels as EUR/AUD must travel higher.

Overall, EUR/AUD must maintain the range from 1.5686 to 1.5400’s and 1.5300’s on a short only strategy inside a 200 pip range. The far better trade is GBP/AUD as GBP/AUD dropped from reported 1.7999 to 1.7700’s and 200 pips.

Not much happening to EUR/AUD while GBP/CAD is acceptable but nothing special.

Brian Twomey

FX Next Week: Trade Opportunities

EUR/USD for January 2023 is on track to record a positive up month however 8 trade days remain to complete the month. EUR/USD’s 23 year historic scorecard for January factors as 14 down months and 8 months higher. A positive January changes to 14 down and 9 up.

EUR/USD’s track record since 2008 factors as 8 down months to 6 months higher and 2019 ended as a Doji candle. To bank on seasonality as a trade strategy is almost a 50/ 50 proposition however trades for down month profits ran multiple 100’s of pips to result as terrific trades.

The true drivers to currency and all market prices are DXY, interest rates and correct moving averages by Statistics or interest rate moving averages. The difference between a correct average by Statistics and interest rates for day trades is extraordinarily small. Both are the same and generate profits for multiple longs and shorts.

Here’s EUR/USD rates: 1.895 , 1.980, 2.335, 2.878,3.339 and compared to the BOJ and USD/JPY as 1.001, 0.989, 0.930. All day trades and all nation’s interest rates lead to 1.0 parity.

Interest Rates

FED 4.33, ECB STIR, GBP Sonia, CAD Corra & Overnight Money Market Finance Rate, NZD OCR, AUD OCR, BOJ Call rates and CHF Saron, Debt Register Claims and Tom Next or better known as Tomorrow Next. The change to market movements occurred in 2016 as central banks re arranged the interest rate trade formula from free float to hold vital interest rates constant from day to day. Market movements were slashed to almost 1/2 compared to free float interest rates.

From interest rates is derived support and resistance levels as: EURUSD every 6 and 7 pips, GBPUSD every 7 and 8, USDCAD 8 and 9, EURJPY 8 and 9, AUDUSD 4 and 5, NZDUSD 4, GBPJPY 10 to 21, DXY every 6 and 7. EUR/AUD 9, USD/JPY 8 and 9.

Most vital to market prices is very few exchange rates and other financial instrument prices are significant.

Next Week

DXY traded to 101.54 lows this week as last week’s levels held at 102.95 and 103.29. Next week’s vitals are located at 102.73, 103.60, 103.68 and 104.34.

EUR/USD next week trades from 1.0527 to 1.0873 and 1.1100’s. EUR/USD trades a 346 pip range vs last week’s 380 at 1.0486 to 1.0866. EUR/USD ranges are slowly compressing week to week. The final target at 1.1001 holds.

GBP/USD trades 1.2026 to 1.2551. Above 1.2551 targets the previously written level at 1.2700’s.
AUD/USD target from January 9 at 0.7086 traded to 0.7062 highs yesterday. AUD lows January 10 was 0.6859.

AUD/USD trades from 0.6803 to 0.6973 and 0.7131.

NZD/USD from January 9 Final target at 0.6569, NZD traded to 0.6529 highs yesterday. January 12 lows traded 0.6306. NZD/USD overall trades 0.6260 to 0.6464 and 0.6693.

USD/JPY’s final target at 122.00 holds on a break at 125.00. The overall short only strategy remains as we wait for the 125.00 break. Highs this week at 131.00’s was a bonus free money trade.

For this week, GBP/AUD’s big break for higher prices is found at 1.7675 and current oversold below 1.7540. The strategy is long all week from any price at 1.7400’s to target middle to upper 1.7500’s. Continue the strategy all week.

GBP/AUD eventually broke 1.7675 and traded to 1.7900 highs from 1.7400’s.

GBP/AUD trades deeply overbought and ranges are located from 1.7996 to 1.7678. Good target is found at 1.7804.

EUR/AUD must break 1.5474 for lower prices to 1.5300’s.

JPY Cross pairs hold the same short only strategy.

GBP/CAD January range at 1.6068 – 1.6912. held from 1.6100’s to 1.6600’s. The target at 1.6500’s completed yesterday as the vital low at 1.6100’s also held.

Overall markets trade the same as past weeks to 2 and 300 pip ranges.

Brian Twomey

BOJ History and Current Board, USD/JPY

As a continuation to the April 30, 2017 long article entitled “BOJ Appointments and Implications”, the 2 leading candidates to replace Kuroda in April when his term ends are: Masayoshi Amamiya and Nakoso Hiroshi. Masayoshi term ends March 19 and Kuroda April 8 therefore the announcement to the next BOJ Governor may materialize sooner than expected.

Where both become interesting and unusual is both were born in Tokyo. Only 4 Governors became leaders from Tokyo since the BOJ began in 1882 ot 141 years. The last was Mayekawa 1979 and Yamigiwa 1956.
All past Governors were born south of Tokyo and from southern Prefectures as: Fukuoka 2, Hyogo 3, Oita 5, Kagoshima 3, Yamagata 3. Kuroda is from Fukuoka. Of the 31 past Governors, all were represented by 9 of the total 47 Japan Prefectures and all from southern Japan..

Historically, Japan changed and split by ascension of Emperor Meiji in the 1860’s. Previously, Japan was isolated for 250 years. Emperor Meiji opened Japan not only to the western world but to catapult Japan to a leading economic nation. Meiji was the leader as the Meiji restoration referred to the Emperor as the “Supreme Executive authority” of Japan.

Meiji was not only born in Southern Japan from Kyoyo and the home to all past emperors but the introduction of the Charter of 5 Principles to upgrade schools and education, creation of the Japanese Parliament known as the Diet, government agencies and adopt western ways lifted Japan into the modern day.

Since the Charter of 5 Principles, southern Japan ruled and dominated not only the BOJ and Prime Ministers but northern Japan was satisfied to its 1860’s isolationist and economic positions.

BOJ 2017

The question to stimulus and Yield Control is not elimination to the policy but to Tweak the program. While Kuroda and Prime Minister Abe saw virtues to Yield Control, Shirakawa, Takahide Kiuch and Takehiro Soto dissented in favor of Yield Control adjustment. Soto was replaced by Goshi Kataoka and ally to stimulus and Yield Control. BOJ.

BOJ 2023

The tweak aspect to yield Control and stimulus derived historically from BOJ members from not Southern Japan but from the North and Tokyo and Kanto Prefectures. Naoki Tamura from Kyoto and Adachi Seiji from Fukuroka are southern members and current exceptions to the 9 member board to favor tweaks to Yield Control.

WAKATABE Masazumi from the north at Kanagawa term ends March 19.

From 2012 to 2017, The BOJ votes based on actual Minutes ran consistently 7 -2 to include favorability to Stimulus and Yield Control.

With appointment to Amamiya or Hiroshi to the BOJ, northern Japan will dominate the Board by votes at 6 to 3 southern members and 2 of the 3 members favor adjustment while Nakagawa Junko from the south at Gukuora is questionable.

The Tweak or elimination to stimulus and Yield Control becomes the question to policy moving forward. The adjustment or tweak appears as a done deal but then comes the question to how far to adjustments and will the northern board eliminate Yield Control in favor of wholesale policy changes as the policy is off to yet another BOJ failure.

USD/JPY

USD/JPY big break now falls from 135.00 to 134.81. Vital levels: 129.30, 131.14, 132.98 and 133.89 Vs below 127.47 and 125.26.

Brian Twomey

FX Weekly: DXY and 14 Currency Pair Levels and Targets

DXY traded to 101.99 lows last week. As written every week since the DXY top at 114.00’s in September, DXY not only contains miles of downside but above averages were built into DXY’s price every 100 ish pips to prevent USD and DXY rises. This week is no different as above averages begin at 102.95, 103.29 and 103.80 and travel every 100 pips to 109.00’s.

From DXY’s close at 102.18, next vital points are located 77 pips to 102.95 and 111 pips to 103.29. DXY is on its way to challenge the 50 year average at 96.00’s and 5 year at 95.00 or 500 more downside pips.

Time Vs Distance and Targets

The question to when DXY challenges 96.00’s is a time factor as Time = distance divide by speed. An example was previously calculated for USD/JPY on January 10th at USD/JPY 131.75 and target at 128.81 or 294 pips.

Time = Distance divide speed or Distance = speed X time.
Total 294 pips from 131.75 or 50 pips per day = 6 days,

At 25 pips per day = 12 days,
At 10 pips per day = 30 days

USD/JPY traded 294 pips to 128.81 target in 3 days.

DXY at 50, 25 and 10 pips per day offers 10 days, 20 days and 50 days. The time factor is a basic synopsis to length of time to hold trades to target.

Charts Vs Trades and Targets

As always, past and future trades requires pen, paper and calculator rather than charts, indicators and fibs as charts and indicator tools severely limits profits by late to entries and short sighted targets.

The Week

From DXY downside and limited ability to travel higher, EUR/USD, GBP/USD, NZD and AUD remain married to long only strategies.

EUR/USD

EUR/USD trades a 380 pip range from 1.0486 to 1.0866. A break above 1.0866 targets the range from 1.0866 to 1.1116 and target at 1.0001. EUR/USD from 1.0486 trades deeply overbought and sustained price above 1.0866 begins a new trend higher. The big lines for the week above 1.0866 is located at 1.0917 and 1.0969. Lower targets for the week is found at low 1.0700;s.

USD/JPY trades a current range from 125.36 to 135.12. A break at 125.36 targets 122.00’s and the short term range from 125.36 to 119.34. USD/JPY’s larger range is located from 112.00’s to 135.00’s. USD/JPY trades massive oversold from 135.00’s and overbought from 112.00;s.

JPY Cross Pairs

Overall JPY trade strategy is short only. The problem to JPY cross pairs is leader GBP/JPY as a vital break exists this week at 156.13. Below targets the range from 156.13 to 153.50 then 152.80. Above 156.13 targets the larger range from 161.85 to 156.13.

GBP/JPY corresponds to not oversold or overbought but as a currency pair without direction or purpose. EUR/JPY serves as JPY cross pair leader to replace GBP/JPY due to EUR/JPY’s price to emerge as the exact same to USD/JPY. GBP/JPY becomes the currency to follow EUR/JPY and USD/JPY.
GBP/JPY overall goes short this week from 157.00’s to high 158.00’s.

CAD/JPY trades from 95.29 to 100.63. Below 95.29 targets the range from 95.29 to 91.34 then 90.18 and targets 94.29.

EUR/JPY trades from 141.02 and 141.54 to 135.26. Below 135.26 targets the range from 135.26 to 131.82 and the target at 134.38. EUR/JPY’s larger range trades 129.84 to 141.02 and 141.54. Similar to USD/JPY, 141.00’s trades massive oversold to deeply overbought at 129.00’s.

For the week, we’re short as EUR/JPY is the preferred trade among JPY cross pairs.

AUD/USD trades 0.6784, 0.6967 and 0.7129. The larger range is established from 0.7600’s to 0.6784. From 0.7600’s is oversold from 0.6900’s while 0.6784 is overbought.

GBP/USD no difference from past weeks as the range is located from 1.1988 to 1.2539. GBP/USD at 1.2200’s is dead center at 1.1988 and 1.2531 on a range trade strategy for longs at 1.2100’s and shorts at 1.2300’s.

EUR/NZD’s range is found from 1.6905 to 1.7257 or 1.6905 to 1.6832 and 1.6802. EUR/NZD is clearly the better trade to GBP/NZD..

GBP/AUD Trade

GBP/AUD’s big break for higher prices is found at 1.7675 and current oversold below 1.7540. The strategy is long all week from any price at 1.7400’s to target middle to upper 1.7500’s. Continue the strategy all week.

EUR/AUD break for lower at 1.5459 targets 1.5300’s on a short only strategy.

EUR/CAD Vs GBP/CAD

Lower for EUR/CAD must break 1.4496, 1.4488 and 1.4477 to target the range from 1.4257 to 1.4477. EUR/CAD’s 10 and 5 year average at 1.4585 and 1.4788 is just ahead of the current price at 1.4502 .
GBP/CAD ranges from 1.6448 to 1.6787 or 1.6448 to 1.6101. Nothing special to GBP/CAD except a long only strategy to target 1.6567 and the break at 1.6448.

USD/CAD next break lower is located at 1.3142 to target 1.3117. Any price at 1.3400’s is open to shorts to first target at 1.3283 then 1.3240.

NZD/USD from the close at 0.6380 trades overbought inside the range from 0.6242 to 0.6458. Above 0.6458 targets 0.6574 and the new range at 0.6458 to 0.6629.

Brian Twomey

Interest Rates and GDP

The Fed interest rate curve from yesterday’s 1.0007 is today 1.0009 or a 0.02 change. Note 1.0 at parity is positive as a negative curve is impossible. Markets would crash and possibly never exist ever again on a negative curve. A curve is a generalized word to refer to interest rate maturities that are Fixed daily by central banks or nation’s bank associations and trade above the 1.0 parity to force market prices to move.

A market price trades from parity through interest rate maturities by the Fixed interest rate to the Fixed currency or market price. This defines a typical day trade as an interest rate trade. Yields and Bonds are secondary or second cousins to interest rates as yields are priced daily from interest rates.

The ECB once traded 15 interest rate maturities in 1999 then slashed to today’s 5 as: 1 week, 1 month, 3 months, 6 months and 12 months. All central banks followed except the FED because the Fed’s system of interest rates are impossible to change.

The Fed’s interest rate system is not only Fixed but all nations price interest rates from Fed rates. This is what allows the commonality to 1.0 curves at parity but also the commonality to allowable day trade movements. Today’s common movements among currencies are about 50 daily pips and less for Oil, Vix, metals, yields, commodities, SPX and certain stock indices.

The Fed’s Fixed system means the organization of interest rate categories are impossible to change or to eliminate a particular interest rate. The Fixed system since 2016 refers to setting daily Fed Funds rates at the same number. Today at 4.33. Pre 2016, Fed Funds rates changed daily and this allowed for wider range market price movements.

The most important interest rate is the 3 month as the 3 month interest rate was the first and began under President Hoover in the 1920’s to assist by funding government for short terms. Remainder interest rates built upon and was introduced after the 3 month interest rate.

The ECB presented a trap for traders at 5 maturities as more than 5 are required for perfect and successful day trades. To use 5 maturities would guaranteed massive day trade losses.

To define the 0.02 change for today, EUR/USD is the example. Yesterday’s day trade for EUR/USD traded as 54, 41, 27 and 8. All numbers refer to range, supports and resistance points. Today’s EUR/USD is defined as 55, 48, 27, 11. Numbers seem small but contain vital information to trades, profits and to prevent losses. The difference to the 0.02 change is seen from USD/JPY.

USD/JPY yesterday traded as 67, 50, 33, 10 Vs today at 65, 57, 32, 13. . The imperative to day trades is to change interest rates daily for trade accuracy.

GDP

GDP last at 3.2 trades above every average from 1 to 11 years. The overall target range is located from 0.58 to 4.15. GDP is fairly neutral to its averages as GDP is neither overbought or oversold. Inflation reported -0.01 yesterday but + 0.1 at the previous reading or a fairly neutral position.

Any nation’s Economic releases materializes as overbought, oversold or fairly neutral. If the major releases as Inflation and GDP factor as neutral then all Economic announcements will report neutral. Note Non Farm payrolls at 233, 256, 263, 269 and 292. Not much difference in 5 monthly announcements.

If GDP reports as neutral then all nations GDP announcements will report a number close to the previous GDP report as GDP for all nations use the same inputs.

Vital supports are found at 1.7678, 1.7138, 1.7055. The average GDP move is located right around 1.92 and places GDP at 1.28 maximum lows and my own 3.89 tops.

Due to GDP’s position as high relative to averages, I see it as 2.78 for January 26th but overall to report a release extremely close to the last announcement at 3.2. GDP at 2.78 places this location above averages at 2.37, 2.29 and 2.05.

Brian Twomey

FX Next Week: Interest Rates and Trade Levels

Markets are complete opposites and divided as EUR/USD and DXY. On the EUR side is located Stock indices, all metals to include Gold, Silver and Copper as the big 3 then Commodities. DXY trades opposite but trades along side the bond price.

The categories break down further to yields, bonds and interest rates.

All market prices trade from the interest rate curve as parity or 1.0000. AUD and NZD are 0 point currencies and trade from parity. JPY and BOJ contain negative interest rates yet trade from parity. All market prices then rise from parity as parity at 1.0000 is the interest rate floor. Only on fleeting instances would a market price trade below parity. This is the central bank design of markets, prices and movements.

The current EUR/USD and ECB interest rate floor trades 1.0344 and quite high yet EUR/USD trades 1.0700’s or 400 pips above 1.0344. No terrible at all. At the 2008 crash, EUR/USD traded at 1.6000’s when the ECB curve traded 1.0500 and 1.0600’s or 5400 pips.

The eyeball view alone says screaming overbought by light years. The EUR/USD dropped but the interest rate curve had to drop in order for EUR/USD to trade miles lower. The market price is always secondary to the interest rate as the interest rate is the prime mover and dictator.

The Fed and DXY curve trades 1.0007 and DXY trades 270 pips above or 101 pips from 102.77.
The curve floor in relation to exchange rates informs a range market as market prices are fairly low in relation to floors at 1.00 parity. At parity or an interest rate floor is an average so any change to central bank interest rates barely moves the 1.00 needle as all interest rates move in a symphonic harmony to each other.

Daily interest rates change barely 0.02 which does nothing to the overall curve but holds markets to trade in smaller and smaller ranges. If interest rates traded freely as was the case for the past 40 years of market trading then market prices would see wider ranges and much more profit opportunities.

A 25 and 50 point change to interest rates barely experiences a 50 pip move and the cause is the interest rate curves. If markets traded freely, market prices would trade 100’s of pips on a central bank change.
The laugh to 1.0344 and 1.0007 is EUR/USD as both numbers are the exact same for trade purposes but the eyeball view appears a wide difference. Despite the difference in numbers, FED and ECB curves forecast any market price on the planet.

For daily trade purposes for 7 and 24 hour trades, interest rates is the only requirement and Statistics becomes a far distant second.

Today’s EUR/USD: 1.0704 1.0717 and 1.0731 Vs 1.0764, 1.0771, 1.0778, 1.0785, 1.0798, 1.0805, 1.0812.
EUR/USD trades every 6 and 7 pips. Pre 2016, EUR/USD traded every 12 and 14 pips and a giant difference from today’s standards.

Next Week

Currency prices remain locked inside 200 ish pip ranges and trade at highs near vital MA’s. AUD/USD for example trades 0.6742 to 0.6963, NZD/USD 0.6228 to 0.6454, EUR/CAD 1.4253 to 1.4476, 1.4487, 1.4493.

EUR/JPY requires break at 141.68 to target lower while CAD/JPY trades fairly normal at 97.91. Short below and long above becomes the only CAD/JPY strategy.

GBP/JPY trades from 156.18 to 162.14. At 159.85 trades fairly normal and the same situation as CAD/JPY. GBP/JPY for next week, we’re long below 159.86 and short at 160.99.

EUR/USD trades 1.0457 to 1.0847 or 400 pips and a 33 pip drop to ranges since last week.
EUR/USD vital points are located every 50 pips from 1.0457 as 1.0507, 1.0557, 1.0607, 1.0657, 1.0707, 1.0757, 1.0807, 1.0657.

GBP/USD trades the same range from 1.1966, 1.2010 to 1.2534. Shorts next week are located from low 1.2200’s.

USD/JPY remains locked inside 125.00’s to 135.00’s. Shorts next week at 133.98 targets 132.00’s and 131.00’s.

EUR/NZD broke above 1.6905 and traded to 1.6974. Remember January range 1.6267 – 1.7075.

GOLD vital: 1877.29 and 1846.57. Gold at 1889.00’s trades at the highs alongside EUR/USD. Gold and EUR/USD offers double trades.

Overall trade next week, well see more of the same 200 pip ranges.

Brian Twomey

Trade Opportunities: Levels, Ranges and Targets

Currency markets trading 2 and 300 pip ranges normally assumes vital levels are contained between 2 and 300 pips but this is not the case especially for cross pairs as cross pairs married the same ranges as USD and Non USD currencies. By marriage to ranges, long term targets for cross pairs were cut off as no long term targets exist. Markets are settled currently into respective ranges and settled refers to stock, commodity and all market prices.

Far better markets exists to trade and profit when cross pairs contain wider ranges to USD and Non USD currencies. Normal patterns over many years transforms as settled prices go ballistic then trade to ranges and settled prices then go ballistic again.

Normally from past years, the cycle repeats every 2 years. Ballistic means, cross pairs and USD and non USD currencies separate and trade far distances to each other. Here we hit 8 and 1000 pip trades without effort except click. The location to current prices is settled to ranges and we wait for ballistic again.

USD/JPY’s 700 pip trade was the last of the big easy trades as the trade was caught perfectly. Astounding is what we missed. See July 22 and the Red monthly candle. The trade was short 137.00 – 139.99 to target 128.00. USD/JPY dead stopped at 130.00’s for a 900 pip trade. The amount of trades missed from 115.00 to 151.00 and 151.00 to 129.00’s is absolutely astounding.

Today, we must work for the profit pips.

EUR/USD topside for today: 1.0683, 1.0690, 1.0697, 1.0704, 1.0717, 1.0724, 1.0731. Trading life begins at the number 7. If the ECB or Fed changes interest rates up or down then trading life remains at 7. If Powell says the economy and markets will crash, trading life remains at 7. Jesus Christ may fly down from the heavens and sound the trumpets, trading life remains at 7.

Following is what our current range markets look like.

EUR/USD 1.0419, 1.0435, 1.0635, 1.0786, 1.0852. Final target 1.1001. January range 1.0341 to 1.0786.

GBP/USD 1.1997, 1.2218, 1.2264, 1.2490, 1.2531. Final target 1.2718. January range 1.1946 – 1.2490.

USD/JPY 134.35, 135.66, 128.81. 125.45, Final target 122.28. January range 135.70 – 129.78, 129.40.

AUD/USD 0.6740, 0.6736, 0.6760, 0.6880, 0.6942, 0.6960, 0.7082, 0.7184. Final target 0.7082. January range 0.6588 – 0.6932.

EUR/AUD 1.5379, 1.5403, 1.5477, 1.5592, 1.5604, 1.5625, 1.5683, 1.5743, 1.5806. January range 1.6049 – 1.5201, 1.5166. No target except range.

NZD/USD 0.6200, 0.6220, 0.6367, 0.6452, 0.6569. Final target 0.6569. January Range 0.6187 – 0.6554.

USD/CAD 1.3544, 1.3469, 1.3420, 1.3288, 1.3241, Final target 1.3117. January Range 1.3736 -1.3335.

EUR/NZD 1.6530, 1.6612, 1.6683, 1.6779, 1.6784, 1.6732, 1.6828, 1.6905. January Range 1.6267 – 1.7075.

EUR/JPY 134.34, 135.15, 135.18, 137.12, 140.98, 141.49. Final target 134.34.

Brian Twomey

FX Weekly: Neutrality, 2 and 300 Pip Ranges

Currency markets to include 18 currencies attained the status of neutrality inside 2 and 300 pips ranges.

Neutrality not only began 2 weeks ago but satisfies weekly and long term perspectives. The vast majority of currency prices traded 700 pips last month and once the month concluded then range trading became the norm to last for weeks to possibly months.

Normally required are range or vital MA breaks to begin a trend however if vital MA breaks trade then currency prices only move to new 2 and 300 pip ranges. Exchange rate numbers may change but not the situation to neutrality or 2 and 300 pip ranges.

For 18 currency pairs trade in a holding pattern as overbought or oversold fails to exist. Currency market drivers are clearly USD V non USD currencies as EUR/USD, GBP/USD and USD/JPY. All are the big 3 to recommended trades over the next month followed by JPY cross pairs as EUR/JPY and CAD/JPY.

GBP/JPY is the outlier as no trade signal exists except for shorts below 162.00′ s to target again 159.00’s. Lows for January is expected 156.46 against deep caution to 156.10.

EUR/JPY targets 134.34 and caution at 135.18 while CAD/JPY targets 94.37 with caution to 95.33
AUD/JPY’s big break for lower is located at 86.90 and targets 88.69 and 87.99.

EUR/USD and GBP/USD trade as a long only strategy and short for USD/JPY and JPY cross pairs. EUR/USD and GBP/USD long only is due to long term targets at 1.1001 and GBP/USD at 1.2700’s provided EUR/USD breaks above 1.0852 and GBP/USD trades above 1.2500’s.

USD/JPY short only is derived from targets at 129.00 and 128.81 however USD/JPY sits above the 125.00 line and no changes to this line over the past month.

GBP/AUD also trades as an outlier as GBP/AUD from 1.7500’s must trade to 1.7700’s then short.

EUR/NZD is the preferred trade to GBP/NZD while GBP/CAD is the best trade to EUR/CAD.

Overall, EUR/USD, GBP/USD, USD/JPY and JPY cross will dominate trades over the next month and offer best profits.

Brian Twomey

11 Currency Pairs: Levels, Averages and Targets

Following is a list of 18 currency pairs vital average breaks and January ranges.

EUR/USD 1.0419, 1.0435, 1.0635, 1.0786, 1.0852, 1.1001. January range 1.0341 to 1.0564.

GBP/USD 1.1997, 1.2218, 1.2264, 1.2490, 1.2531, 1.2718. January range 1.1946 – 1.2490.

USD/JPY 134.35, 135.66, 128.81. January range 135.70 – 129.78, 129.40.

AUD/USD 0.6740, 0.6736, 0.6760, 0.6880, 0.6942, 0.6960, 0.7082. January range 0.6588 – 0.6932.

NZD/USD 0.6200, 0.6220, 0.6367, 0.6452, 0.6569. January Range 0.6187 – 0.6554.

USD/CAD 1.3544, 1.3469, 1.3420, 1.3288, 1.3241, January Range 1.3736 -1.3335.

EUR/NZD Vs GBP/NZD

EUR/NZD 1.6530, 1.6612, 1.6683, 1.6779, 1.6784, 1.6732, 1.6828, 1.6905. January Range 1.6267 – 1.7075.

GBP/NZD January range 1.8879 to 1.9433.

GBP/AUD Vs EUR/AUD

GBP/AUD Shorts below 1.7700’s. January range 1.7612 to 1.7900’s.

EUR/AUD 1.5379, 1.5403, 1.5477, 1.5592, 1.5604, 1.5625, 1.5683, 1.5743, 1.5806. January range 1.6049 – 1.5201, 1.5166.

GBP/CAD Vs EUR/CAD

GBP/CAD 1.6046, 1.6068, 1.6098, 1.6316, 1.6480, 1.6504, 1.6560,1.6836, January range 1.6068 – 1.6912.

Remainder pairs will post shortly

Brian Twomey

FX Next Week

DXY at 105.16 is up against averages next week at 105.34 and 105.76. Longer term 106.56, 107.37, 108.33, 108.71 and 109.09. DXY traded to 105.34 then dropped. Next levels below are located at 104.65 and 104.45 then targets at 103.21 and 103.03. DXY requires the break at 104.45 to continue its downside projections to challenge 96.00’s and 95.00’s.

Thank you to all at FxStreet.

USD/CAD traded 311 pips last month from 1.3701 to 1.3390. From the December 13th post, USD/CAD traded highs at 1.3641 then 3 days later to 1.3701 and to lows at 1.3472 yesterday.

From December 13, USD/CAD actually traded 229 pips from 1.3701 to 1.3472.

USD/CAD targets from last month 1.3346, 1.3238, 1.3203 and 1.3082.
USD/CAD targets this month: 1.3426, 1.3359, 1.3292, 1.3243, 1.3181.

USD/CAD trade strategy remains short to target 1.3200’s. A break at 1.3485 will see CAD much lower and much quicker.

Next Week

USD/JPY requires a break at 134.20 to then target 132.52. Lines at 136.00’s dropped to 1.3588 and continues the long slide lower.

GBP/JPY 163.00’s also drops to 162.00 and specifically 162.09, above targets 164.00’s. Oversold next week begins at low 158.00’s.

EUR/JPY must hold below 141.50 to target 140.13 easily.

AUD/JPY must trade below 91.39 and NZD/JPY 84.29. CAD/JPY trades between 99.19 and 97.59.

GBP/USD oversold begins at 1.1802 and higher requires a break above 1.1938.

AUD/USD hold a die or die position at 0.6731 and NZD/USD at 0.6210.

EUR/USD remains the outlier to AUD, NZD and GBP at 1.0424.

GBP/USD was first to break to lead AUD, NZD and EUR/USD lower.

EUR/NZD traded to tops at 1.6937 yesterday and 1.6934 today. Once EUR/NZD ranges are firmly established, ranges hold for many weeks to allow continuous longs or shorts. For EUR/NZD since December, 1.6900’s tops offered many shorts and will last all January.

EUR/AUD trades to 1.5300’s and 1.5200 target on a break of 1.5486. EUR/AUD is similar to EUR/NZD as ranges once established hold for many weeks to offer multiple longs and shorts.

Overall currency markets trade in a fairly neutral position and waits on the DXY resolution to break 104.45 or 105.34 and 105.76.

Brian Twomey

FX Weekly: Trade Results, GBP/USD, EUR/NZD

Since December 12 and 3 weeks, 19 long term trades were offered. A quick run down as a larger theme is vital to today’s post. USD/JPY and JPY cross pairs + 700 pips per currency.

EUR/AUD target at 1.5300 and 1.5200 traded from 1.5900’s to 1.5416 or +500 pips. EUR/NZD top at 1.6900’s offered 12 short trades for about 100 pips per trade. GBP/USD failed at vital 1.2500 and traded to 1.1900’s. GBP/CAD broke below 1.6700 and traded to target at 1.6300’s. EUR/CAD middle 1.4400’s.

Remember GBP/USD long at oversold 1.1900’s. All received another 150 pips.

GBP/AUD top at 1.8200’s traded to 1.7700’s target and lower to 1.7500. Then AUD/USD, NZD/USD, EUR/USD.

Trade requirements ? Click for 5000 ?, 7,000 ? 8,000 Pips. Trader requirements? Set entry and targets and walk away for a few weeks.

Brian Twomey requirements? Enter a few numbers per currency or 19 currencies at about 500 numbers. All 28 currencies? roughly 600 numbers. Time devoted is 1 full day to satisfy profits at 4 and 5,000 and 8,000 pips per month. And the right to live a life and never watch a screen, listen to worthless commentary, hope an economic announcement may go haywire or gamble on a questionable trade service.

Not required? Watch screens all day, follow the most ridiculous and not profitable nuances of the market as if something may change, as if the market may crash or possibly profit an extra 20 and 50 pips for the day or week.

EUR/USD began 3 weeks ago at 1.0300’s to 1.0800’s. Today, 1.0400’s to 1.0800. Nothing changed yet EUR/USD is watched daily like a lazer beam as if something will change.

Think about all the events the market offered over the last 3 weeks. For EUR/USD, nothing changed. GBP/USD didn’t change from 1.2500’s to 1.1900’s.

EUR/USD levels offered yesterday from 1.0400’s to 1.0800, may hold for weeks and months. What is the logic to watch screens.

While 70% lose and after 20 years, we walk with confidence and knowledge rather than walk with fear on grounds not trusted.

Long term trades are offered here since 2016 and multiple 1000’s upon 1000’s of profit pips realized.
A popular trade service offers daily webinars to go over the same tired trades. This is the cognoscenti of cognoscenti, sent from heaven via special spaceship just to offer trades from elite of elite traders. This is actually the trader graveyard. Did GBP/USD trade to 1.1700’s or 1.2200’s. Prosecution rests.

I’m offering an overhaul to trades and trading by exclusion of 7 hour and weekly trades in favor of 24 hour and long term trades. Offered is the best of 2 trade categories and best categories to maximum profits. The 24 hour trades satisfies day traders, screen watchers and chronic addictions.

GBP/USD 3 weeks ago V Today

3 weeks ago: Long term targets are 1.1961, 1.2314, 1.2544 and 1.2721.
Vital levels: 1.1950 and 1.1961 to 1.2314 and 1.2537. A break below 1.1950 targets 1.1893 and 1.2719.

Lows 1.1901, highs 1.2445.

Today

Targets: 1.1988, 1.1997, 1.2328, 1.2469, 1.2728.
Vital breaks 1.1997, 1.2542 and 1.2551. Below 1.1988 targets 1.1913, 1.1876.
Inside 1.1988 to 1.2328 is located 24 hour trades.

Overall, no changes in 3 weeks.

EUR/NZD 3 Weeks ago Vs Today

At 3 weeks ago: targets 1.6519, 1.6592 then the vital break lines at 1.6640 and 1.6647. Higher must break 1.6647 and many averages at 1.6700’s starting at 1.6723, 1.6767 and 1.6797. Above 1.6700’s targets 1.6800’s then 1.6900’s.

Lows 1.6570 to 1.6996.

Today

Tops: 1.6997, 1.6957, 1.6934. Vital averages: 1.6906, 1.6850, 1.6784, 1.6732. Targets: 1.6703, 1.6611, 1.6551, 1.6530.

Overall no changes. Short 1.6900’s all month.

GBP/USD and EUR/NZD are now established for the next month of trading although EUR/NZD isn’t the best demonstration choice.

Brian Twomey

EUR/USD January, USD/JPY, DXY, USD/PLN

In EUR/USD 23 year history since 1999 to include 2022, EUR/USD dropped for January overall 14 months and 8 months were up. January 2019 was a question mark due to a Doji candle, The current January of 2023 appears to end with a red down candle for a 23 year total of 15 down months vs 8 month up.
EUR/USD trades from 1.0412 and 1.0434 to 1.0852. Below 1.0412 targets 1.0383 and 1.0332.

Last week, EUR/USD was oversold from 1.0847 and overbought from 1.0400’s. At 1.0600’s, EUR/USD sits dead neutral.

Upside, 1.0522, 1.0632, 1.0687, 1.0742, 1.0797, 1.0824.

DXY

DXY top at 114.79 stopped short of its historic average at 120.00’s and 121.00’s as both averages were holdovers from the 1985 Plaza Accords and 1987 Louvre Accords. DXY traded to 165 highs in the 1980’s.

The 50 year average remains at 96.00’s and 5 year average at 95.00’s. Since 114.79 highs, DXY averages from above continue to fall as DXY trades lower.

Current averages are located at 104.00’s and 105.00’s. As DXY trades to low 103.00’s and 102.00’s, averages at 104 and 105.00’s will continue to descend.

The DXY strategy is short as 96.00 from current 103.00 contain another 700 pip drop. And just to challenge 96.00’s.

USD/JPY

The current target for USD/JPY is 122.35. USD/JPY must break 125.51 to achieve this target to then place USD/JPY in a 600 pip range from 125.51 to 119.36.

Next targets below are 128.96 and 125.15. Topside averages at 136.00’s continue daily drops. Currently 135.91 and 136.02 are vital. Both averages will continue drop to 135.00’s and 134.00’s.

USD/PLN

USD/PLN at 4.4047 trades from 4.2842 to 4.4075, 4.5097 and 4.5308. USD/PLN big break is 4.5097.
Lower targets on a short only strategy: 4.3527, 4.2439 and 4.1579. USD/PLN will follow DXY much lower.

2 and 10 Year Yields

From the December 2021 forecast article.
2 year yield at the 5 year average for 2021 was 1.3025 and 1.6349 today.
The 10 year yield at the 5 year average in 2021 was 1.9150 and today 2.0484.

Brian Twomey

SPX, USD/JPY, BOJ

SPX500 at 4800’s are lifetime highs since 1970 lows 68.70. Above 4800’s assumes new lifetime highs. Targets are located at 4924.02, 5070.74, 5108.99, 5182.86 and 5201.53. Note Targets at every 100 points or the same 100 points resistance to DXY.

Deep caution exists not only at 4800’s but a long term short only strategy is warranted. SPX 5200’s are maxed no matter how its viewed from 68.00 lows to lows dating from 2022 to 1970.

Years 2022, 20221 and 2020 were best trade years for SPX since 2015 or 7 years. Lows at 1800’s in 2015 traveled 3000 points to 4800’s. The number 7 or Genesis 41 as the 7 rich years and 7 lean years pertinent to all markets.

Prior to 2019, SPX was averaging 20 – 66 points per month on yearly ranges from 247 to 595 points per year. Yearly ranges expanded from 247 lows in 2015 to 1400 points in 2022.

2022 = 4800 to 3400, a drop of 1400 points or -29% and 116 points per month.
2021= 3660 to 4800’s or +1148.81 or +31% and 95 points per month.

2020 = 2199.35 to 3766.47, +1567.12 or +71% and 130 points per month.
2019 =2448.14 to 3244.86 or +796 points or +32% and 66 points per month.

2018 =2346.89 to 2942.20 or +595 points or +25% and 49 points per month.
2017 = 2248.87 to 2695.18 or +446 points or +19% and 37 points per month.

2016 = 1813.47 to 2277.20 or +463 points, or +25% and 38 points per month.
2015 = 1867.86 to 2115.64 or +247 or +13% and 20 points per month.

From 2008 to 2022, SPX traded an average at 302 points per year from 4239 points.

SPX vital average to break on the downside is the 5 year at 3451.53. Further averages are located at 3577.18, 3504.24, 3309.87, 2942.14, 2739.01.

Break below 3500’s offers the best challenge to trade below the 5 year average to target 2900’s and 2700’s and 2098.83 on a much longer term basis.

USD/JPY Vs DXY

USD/JPY traded 3800 pips in 2022 from 113.00’s to 151.00. The big line break above remains 136.00’s however 132.66 was vital to further downside.

USD/JPY 5, 10 and `14 year averages are located at 113.00, 111.00 and 103.00’s and offer targets at 123.00’s, 121.00’s and 118.00’s. All average are richter scale overbought.

BOJ

Read academic papers since 1900’s and found is 12 and 15 economic experiments all failed miserably. The BOJ are complete failures as I call them the Gang that can’t shoot straight.

Experiment is the key word as the BOJ must control markets and prices. Its an ideological control and impossible to break from a deeply conservative midset.

Note the terms of Japanese Corporate governance as Keiritsu and Zaibatsu means monopoly or financial clique. The system ruled Japan from 1868 to current day. A keiretsu and Zaibatsu are grouped industries with a bank inside the group to serve finance interests. Keiretsu’s and Zaibatsu’s prevented imports in the 1980’s as outside trade failed to crack the Keiretsu interlock.

The BOJ pegged USD/JPY to GDP and the money supply in the 1990’s and as the money supply was volatile so then was USD/JPY. This experiment failed.

The BOJ Pegged USD/JPY to GBP/JPY then Gold in the 1930’s and failed.

Today its YCC or Yield Control or to first purchase 2 year bonds, then 10 and now expand purchases.

Note all BOJ governors hail from the same Prefectures and all cut from the same mold. BOJ Governors since 1882 hail from Southern Japan and South of Tokyo. Of the 31 past Governors, all were represented by 9 of the total 47 Prefectures.

As usual, the BOJ are off to the races to meet its next failure.

Brian Twomey

2 and 10 Yields: Recession Level, Trades and Targets

When the Fed first raised 25 points in March 22, the 10 year yield low was 1.675 and 2 year at 1.2524. The 10 year traded at or below the 10 year monthly average while the 2 year traded between the 10 and 9 year monthly average. The 2 year maintained not only a higher starting point from the 10 year but outpaced the 10 year by 3.19 Vs 2.15 points.

2 Year Crossed above 10

The 2 year crossed above the 10 year in the final analysis rather than the 10 year crossed below. The 10 year lacked the power and range to maintain its place above the 2 year as it traded to its maximum top. The 2 year cross above the 10 was an easy proposition as it contains wider ranges. If the 10 year contained proper ranges, inversion was impossible and possibly indications to recession.
Inversions

The first inversion occurred in April as the 10 year traded to 2.991 highs and crossed above the 2 year at 2.78. The 2 year then crossed above the 10 year in July at 3.27 and 10 year at 3.106. The 2 year overall ascent reached 4.87 in November while the 10 year traded to 4.33 in October on a 1 month lag.

Inversion continues today as the 10 year at current 3.87 trades below every yield from 1 month to the 30 year and below the 2 year at 4.42. The 2 and 10 spread at -55 coincides to the 0.55 slope from an absolute value basis and informs a top is in place for the 2 and 10 year yield. Most vital 10 year at 3.87 and 3 month at 4.37 also factors -0.50.

Another view is the 10 year highest ranges 1.0214 and 0.9348. Divide 2 = 51 and 46 at 1/2 ranges while the 2 year 1/2 ranges at 1.6061 and 1.4775 factors as 80 and 73.

The 2 and 10 correlate at +92% to inform rises and falls travel together for double trades.

The 10 and 2 year traded on a massive rampage higher to break every monthly average from the 10 year to above the 1 year. Both the 2 and 10 trade severely overbought.

10 and 2 year Averages and Targets

The 10 year averages begin from 2.9953, 2.2247, 2.1332, 2.1080, 2.0960 and 2.0484 at the 5 year monthly average. The average at 2.133 is actually today’s 10 year monthly average however due to the 10 year’s quick rise, 2.1332 moves to the 3 year monthly average to properly rebalance averages.

Targets are located at 3.72, 3.1595, 2.9720, 2.9467, 2.8585, 2.8367, 2.8319, 2.8143, 2.7782, 2.7537,.
The 2 year averages are located at 3.0921, 1.6894, 1.6349, 1.6349, 1.6004, 1.4901, 1.4098. The bottom is located at 1.1882 while the 5 year is found at 1.6349.

Targets are found at 4.1813, 3.2955, 2.9119, 2.7701, 2.7412 and 2.7100. The lowest target tracks below to 2.3478 and 2.2375.

The formal and first inversion cross occurred at 2.33. The 2 year as the Fed’s Policy rate at 4.42 led the way upward and due to its high range ability must lead the way lower to cross below the 10 year. The 2 year at 4.42 coincides to SOFR at 4.30, Fed Funds at 4.33, General collateral rate at 4.26. SOFR naturally followed the 2 year higher since March.

Yield Curve Average

The current yield curve averages sits at 4.2041 and trades between 1 to 3 month, 2 to 3 year, 3 to 5 year, 5 to 7 and 20 to 30 year. The average holds through next weeks trade unless a move about 30 points is seen.

Recession Probability

From daily Fed probabilities to recession factored from the 10 year to 3 month calculates to 38% for November and 38% as of December 30 and the last trade day for 2022. Estimates are derived from a slope at 0.5333 and coefficient at 0.6330 and the same as my 0.55 slope. Recession probabilities remain very low..

Brian Twomey