Currency market: FX next week
|Yesterday, Powell failed to offer reprieve to DXY and to the vital DXY Vs EUR/USD relationship. EUR/USD traded 120 pips this week to 102 for DXY. Neither DXY nor EUR/USD broke significant levels as both are trading inside small and meaningless ranges. Powell offered barely a 40 pip response to yesterday's Fed meeting.
Viewed as either DXY, EUR/USD or both, the averages barely moved over the past 2 weeks and no changes to overbought DXY and USD VS EUR/USD. EUR/USD is contained next week from oversold 1.0599 to overbought middle and upper 1.0700's. DXY is stuck from overbought 105.00's and oversold 104.00's and 103.00's.
As currency prices are the driving force to all financial market instruments, Gold, metals and stock markets will remain trading in small ranges until the EUR/USD V DXY relationship breaks free.
EUR/USD must and will eventually break 1.0797 to trade the range from 1.0797 to 1.0924. Long term target remains 1.1021. Higher, EUR/USD 1.0718 and 1.0749 to challenge 1.0797.
The overall trade strategy remains long EUR, GBP, AUD, NZD Vs short DXY, USD, USD/JPY unless DXY trades a clean break at upper 105.00's.
EUR/AUD and GBP/AUD targets
Recall targets on August 13, GBP/AUD traded 1.9500's, long term targets 1.8841 and just the beginning to targets at 1.8600’s and 1.8500’s. GBP/AUD traded 1.9053 lows and 500 pips.
EUR/AUD August 13 traded 1.7000's with a minumal target at 1.6200's. EUR/AUD traded lo low 1.6400's. GBP/AUD and EUR/AUD trade duration was 3 weeks as trades are on gong until target completion.
Massive oversold GBP/USD targets the break at 1.2521 to trade the range from 1.2521 to 1.2646 and 1.2847. GBP's long term targets remains 1.2731.
USD/JPY
Lower for BOJ expected. Friday is a horrible day for BOJ as big interest rate changes occur. Next week, USD/JPY trades 149.72 to 147.87. No changes to USD/JPY this week as 100 pips traded and barely 175 pips is expected next week.
GBP/JPY trades 184.99 to 181.65. GBP/JPY 180.53 is required to break in order to trade 179.00's and 178.00's.
USD/JPY and JPY cross pairs are caught in the DXY and EUR/USD problem. GBP/JPY traded 136 pips this week and 111 for EUR/JPY.
Overall EUR/JPY traded a 318 pip range over the past 6 weeks and 469 for GBP/JPY.
JPY cross pairs trade oversold to USD/JPY overbought. Again, the DXY V EUR/USD relationship wreaking havoc on markets.
GBP/NZD higher must break 2.0821 and 1.7952 for EUR/NZD.
GBP/CAD, EUR/CAD and AUD/CAD trade Richter scale oversold. Longs for next week.
Overall, the same old weekly problems remain as the DXY Vs EUR/USD relationship must break free to create trade ranges. Failure to break then markets remain trading dead small ranges.
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