The problem exchange rates in today’s markets are located within anchor currencies as EUR/USD, GBP/USD, AUD/USD and NZD/USD. The current prices are far to low and all are responsible to drive markets and to create wider trade ranges. All suffer the effects of a higher DXY over the past 9 weeks.
The low prices to anchor currencies created a further correlation disjunction to wide rangers as GBP/AUD, EUR/AUD, EUR/NZD and GBP/NZD.
GBP/AUD on the way to 1.9970 highs on August 17 correlated to GBP/USD at +88%. As GBP/AUD dropped to 1.9200’s and GBP/USD at 1.2380, correlations today trade at +30% and -91% to AUD/USD.
EUR/AUD correlates to EUR/USD at – 49% and -93% to AUD/USD. EUR/AUD’s price is completely lost and trades without an anchor connection.
AUD/USD was never the concern as AUD/USD correlated to GBP/AUD at -94% on August 17 and today at – 91%. AUD/USD traded highs on August 17 at 0.6450 and opens this week at 0.6427. AUD/USD was never part of the GBP/AUD equation to correlations.
Correlations continue as EUR/NZD Vs EUR/USD at -54% and -94% to NZD/USD. GBP/NZD correlates to GBP/USD at +27% and -92% to NZD/USD.
Anchor currencies continue to trade far to low while wide rangers despite a healthy drop, trade overbought.
USD/JPY Vs JPY cross pair correlations
The bright side to correlations is USD/JPY correlates to GBP/JPY +96% and +32% to GBP/USD. EUR/JPY correlates to USD/JPY at +97% and -47% to EUR/USD.
The difference today is USD/JPY owns the JPY cross pairs as opposed to past months when USD/JPY shared a fairly 50/ 50 correlation to anchor currencies. EUR/JPY for example correlated to EUR/USD at +50% and +50 to USD/JPY. JPY cross pairs once trapped are now free to travel alongside USD/JPY.
The week
DXY traded higher every week for the past 9 weeks from 99.00 lows. Dating to 2015, DXY traded many times as 6 and 8 weeks straight higher and straight lower.
DXY above vital levels are located at 105.97, 106.57, 107.18 and about every 100 pips to 110.00’s.
DXY lower trades 104.35, 103.58 and roughly every 100 pips to 100.00’s.
DXY is the true problem currency. Trades are factored as DXY much lower to again challenge 99.00 lows.
USD/JPY trades this week from low 149.00’s to middle 146.00’s. Middle 146.00’s are blocked as the strategy is trade the 146.00 to high 148.00’s ranges.
USD/JPY long term targets are located at 142.19, 134.85 and 130.57. The target at 142.19 is located between the 100 and 200 day average.
EUR/JPY 156.00’s for the week are blocked. EUR/JPY 156.00’s trade at the 100 day average. The week range trades from 156.00’s to 159.00’s and low 160.00;s.
EUR/JPY long term targets are found at 153.18 and 146.56. The 153.18 target trades between the 100 and 200 day averages.
GBP/JPY long term targets 177.96 and 170.10 to start. The bottom at the 253 day average trades at 171.66.
USD/JPY, EUR/JPY and GBP/JPY trade deeply overbought and all contain a long way to drop.
GBP/USD must break 1.2552 and 1.2653 to target 1.2736.
EUR/NZD long term targets 1.7770, 1.7506 and 1.7344. EUR/NZD must trade to minimum 1.7770 on a break of 1.7974.
GBP/NZD break at 2.0868 targets 2.0632 and 2.0289. The bottom 253 day average = 2.0154.
GBP/NZD big line for the week is 2.1200 and 1.8200’s for EUR/NZD.
Easy targets for GBP/NZD and EUR/NZD on short only strategies.
AUD/NZD trades deeply overbought but a warning as AUD/NZD trades as a serious problem currency.
Deeply oversold EUR/USD targets the break at 1.0813 then 1.0930 to target 1.1025.
EUR/AUD next targets 1.6395, 1.6203. The 253 day average = 1.6198.
GBP/AUD next targets 1.9032, 1.8769 and 1.8640. The 253 day average 1.8609.
If AUD/USD and NZD/USD ever decides to trade normal again, the targets for AUD/USD at 0.6609 and 0.6756 are easy to achieve. NZD/USD targets 0.6082 and 0.6243.
Deeply oversold GBP/CAD strategy is long for the week as well as EUR/CAD and NZD/CAD. GBP/CAD and NZD/CAD are preferred trades to EUR/CAD.
