Fed interest rate move contains the power to significantly move currency prices

Brian Twomey Brian's Investment

The current arrangement to the 200 pip range forecast for this week is actually EUR/USD 67 pips, NZD/USD 70, GBP/USD 91 and AUD/USD 102. For the past 7 weeks, EUR/USD and NZD/USD traded +100 pip ranges in 4 of 7 weeks. GBP/USD and AUD/USD were big range trade winners as GBP traded 150 and 200 pip ranges in 6 of the past 7 weeks. AUD/USD followed GBP/USD perfectly by +100 pip ranges in 6 of the past 7 weeks.

USD/JPY traded +150 pip weeks in 6 of the past 9 weeks and above 300 pips in 4 of the past 9. USD/JPY traded 835 pips 4 weeks ago during the BOJ interest rate rise. Since 835, USD/JPY traded 141 pips, 319 and 321 in each of the past 3 weeks.

Currency market prices remain trading in proximity to 5 year averages. The 2 most vital currencies to 5 year averages are EUR/USD at 1.1121 and GBP/USD at 1.2803. Neither averages moved since January. The dictator averages to allowable weekly ranges are bottom most averages.

EUR/USD current lineup = 1.0808, 1.0870, 1.1032, 1.1121, 1.1226, 1.1469. The bottom average rise since 1.0700;s and 1.0600s allowed for wider range trade weeks while 1.0808 compressed the range to 67 pips in the current week.

The 100 and 200 pip weekly ranges appears as more permanent long into the future. The 100 and 200 pip range weeks is actually Bretton Woods 1% movements. EUR/USD at + and minus 1% factors to 1.0738 to 1.0955.

If the Fed cuts once by 25 points then EUR/USD ranges from 1.0647 to 1.1048. Only a Fed Interest rate move contains the power to significantly move currency prices.

A break of the 5 year average at 1.1121 means another 100 and 200 pip range. Same concept under different numbers.

Week

EUR/USD trades 1.0870, 1.0886 and 1.0949 Vs 1.0836, 1.0808 then 1.0700's.

GBP/USD ranges from 1.2607, 1.2626, 1.2778, 1.2803, 1.3111, 1.3493.

The main focus to our trades are USD/JPY and JPY cross pairs and wide rangers as GBP/NZD, EUR/NZD, GBP/AUD, EUR/AUD. The best for profit trades are GBP/NZD and GBP/AUD then EUR/NZD and EUR/AUD.

GBP/NZD higher must clear 2.0804 and 1.7838 for EUR/NZD. Oversold EUR/NZD leads EUR/NZD next week.

EUR/AUD trades just below vital 1.6394. Shorts apply next week to GBP/AUD and EUR/AUD.

Author

Brian Twomey

Brian's Investment

Brian Twomey is an independent trader and a prolific writer on trading, having authored over sixty articles in Technical Analysis of Stocks & Commodities and Investopedia.

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