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When EUR/USD dropped 8 weeks ago on December 23 from 1.1138, the 5 year average was located at 1.1160. The initial respomse for the next 2 weeks was trade lower by 134 then 162 pips. The week of January 6 began and for the next 6 weeks, EUR/USD ranges severely compressed.
EUR/USD traded its best week at 123 pips during the week of January 13. EUR/USD traded 110 pips last week and 73 for the prior week. For the past 8 weeks, EUR/USD averaged 115 pips per week and 105 pips for the last 6 weeks.
DXY from the 100.00 bottom 8 weeks ago traveled higher for the next 2 weeks by 115 then 176 pips then ranges assumed severe compression. For the past 8 weeks, DXY averaged 111 pips per week and 100 pips for the last 6 weeks.
EUR/USD traded 500 pips lower and straight down while DXY progressed 500 pips higher. EUR/USD achieved its destination but at a much slower pace than normal as 100 pip weeks for EUR/USD is far outside the 150 and 200 pip norm.
Posted December 21 and 24 to EUR/USD levels. 1.0590, 1.0680, 1.0828, 1.0878, , 1.1056, 1.1160, 1.1273, 1.1521. EUR/USD’ s low achieved last week at 1.0594 at 8 weeks later and well within the trade bounds.
The answer to tiny EUR/USD ranges occurred 4 weeks ago when EUR/USD broke below 1.0800’s. The 148 pip range from 1.0828 to 1.0680 began to not only compress as EUR/USD traded lower but EUR/USD became more oversold with every traded pip drop.
The opposite is true for DXY as overbought began at 102.00’s and 101.00 but DXY traveled higher despite overbought and ranges became compressed with every traded pip higher.
The 2nd EUR/USD and DXY problem is located at the interest rates of the ECB and FED as neither the ECB nor Fed rates moved since November. The USD 10 year yield ranged 0.52 points and 0.45 for the German bond.
What slowed prices over the past 6 and 8 weeks was a combination of zero interest rate moves and range compression to EUR/USD and DXY.
Overall, EUR/USD dropped from the 5 year average at 1.1160 as DXY rose from the 50 year average at 99.00’s.
EUR/USD at 1.0700’s trades deeply oversold. The overall problem is the 5 year average now at 1.1144 and 10 year at 1.1399.
EUR/USD updates for next months are located at 1.0723, 1.0738, 1.0806, 1.0898, 1.1057, 1.1144, 1.1262, 1.1399 and 1.1507.
EUR/USD targets: 1.0859, 1.0911 and 1.0980. EUR/USD’s best trade range at 159 pips is located from 1.0898 to 1.1057. For EUR/USD to break the 5 year average, DXY must trade below 99.00’s.
The week
USD/JPY first targets 149.19 then lower. The true expert commentators in Japan have much to say to USD/JPY as the 150.00 levels is far to high and stifles comsumer demand coupled with above 2% Inflation levels.
On a possible lift of negative interest rates to positive, the current JGB yield at 0.73 travels to 1.0. Japanese banks overwhemingly favors the BOJ to assume positive interest rates as trading profits and interest income massively increases.
Oversold in the EUR/USD universe includes EUR/AUD, EUR/CAD, EUR/NZD and EUR/GBP.
GBP/JPY targets easily 188.20, EUR/JPY 160.82 and CAD/JPY 110.66. All easy targes to achive and all severely overbought.
GBP/USD updates for next months: 1.2454, 1.2603, 1.2630, 1.2797, 1.2826, 1.3149, 1.3542. The 5 year average at 1.2826 bumps against 1.2797 and 1.3542 represents the 10 year average.
AUD/USD higher must break 0.6448.
GBP/AUD traded to target on Friday at 1.9267 and just prior to the big break at 1.9243. The longer term target remains 1.8700’s. Lower must cross below 1.9246.
Both EUR/AUD and GBP/AUD begin the week oversold.
EUR/NZD and GBP/NZD also trade oversold and heading higher this week. USD./CAD sits just below vital 1.3487 and must cross to trade 1.3518.
Currency market prices remain in severe compression mode and the results this week will materialize the same as the past 6 and 8 weeks.
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