Technical Analysis

FX Weekly: U.S. Inflation Report Sparks Big Moves

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    Tuesday’s Inflation story was an anchor pair event as traded 213 pips then and matched DXY at 213, 221 and at 308 pips. traded an extraordinary 175 pips to at 145.

    Missing in action was cross pairs as traded 140 pips, 185, 94, 107, 139 and 148 for .

    Cross pairs traded barely above 1/2 DXY ranges compared to anchor pairs EUR/USD and GBP/USD. GBP/AUD and EUR/JPY were Wednesday’s range winners at 172 and 218 pips.

    Dow Jones

    The dropped 1000 points. On a 31,000 price, 1000 points lack classification to a move. The Dow must travel at least 5,000 points to have meaningful significance. The Dow at 1000 points is a media story rather than a market event.

    Next Week

    EUR/USD is expected close on Friday at 0.9986, then range from 1.0110 to 0.9986 and 0.9986 to 0.9863. Next week’s long target is 1.0110. Deeply oversold at 0.9600’s lies just below EUR/USD’s price and holds as EUR/USD supports.

    Higher EUR/USD must clear 1.0233 to target easily 1.0300’s. DXY is expected to trade from 110.64 to 107.13. At 110.64 remains below the 110.78 highs from 40 and 50-year monthly averages, while 107.13 breaks to new lows.

    The overall market story is EUR/USD Vs. USD/JPY and DXY. USD/JPY serves as the best proxy for DXY. Both are the same currencies, which are massively overbought, short and long-term.

    Expected close for USD/JPY at 142.27, then means short next week to target 140.00’s and 139.00’s. Any price above 142.27 is a gift for extra pips to shorts in the vicinity of 143.64.

    GBP/USD at the 1.1576 expected close, then ranges next week from 1.1380 to 1.1576 and targets just below 1.1770’s. at 1.1100’s holds GBP/USD as support.

    AUD/USD is running into range problems. Tuesday’s 145 pip day was an oversold story, while last days, AUD/USD traded 50 pip days. AUD/USD’s magic number for higher is 0.6930.

    Massively oversold NZD/USD targets next week around 0.6165 on entry anywhere. NZD/USD is the best trade rather than AUD/USD as AUD/USD will underperform NZD/USD.

    GBP/JPY 163.35 and EUR/JPY 139.76 hold JPY cross pairs from the big drop. Add USD/JPY at 136.00’s.

    JPY cross pairs began the week deeply overbought and remain deeply overbought for next week on a short-only strategy.

    To 24 Hour trades were added EUR/CHF and GBP/CHF for 14 currency pairs. EUR/CHF was added to weekly trades for a 22 currency pair total.

    EUR/CAD close at 1.3045 may not trade, which means EUR/CAD relegates again to last place in the trade rankings. Same story as last week. so far is the better long trade for next week to target just under 1.5300’s.

    EUR/NZD, as written last week, began the week overbought and traded higher this week. EUR/NZD trades in the stratosphere overbought. Good short trade to target 1.6400’s.

    at 1.9164 is or die approach as 50/ 50 exists to guess longs or shorts. GBP/NZD last week was deeply oversold at 1.8900’s and traded 300 pips higher to 1.9200’s.

    GBP/NZD Vs. EUR/NZD extreme divergence existed to oversold GBP/NZD Vs. overbought EUR/NZD. GBP/NZD resolution of 1.9164 may resolve the divergent problem for next week.

    EUR/AUD 1.4771 holds EUR/AUD higher. Short next week at 1.4900’s to target low 1.4800’s. Not much excitement about EUR/AUD.

    GBP/AUD is materializing as the better long trade to target the middle 1.7100’s, but like EUR/AUD, no thrills exist to GBP/AUD.

    It is expected to be a typical trade week without violent swings.

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