EUR/USD again at 1.1300’s is a neutral price in relation to the rising 5-year average now at 1.1502. The figure 1.1502 is derived from the 2020 to 2021 move from March 2020 at 1.0637 to Jan. 1 at 1.2346. The 5-year average at 1.1502 happens to coincide to the past move.
EUR/USD will continue the downtrend and to break from neutrality must cross below 1.1268 then 1.1221. On Friday, EUR/USD failed on 4 attempts to break 1.1260’s, then bounced back to its neutral position at 1.1300’s.
GBP/USD highlights the currency market story this week as most currency pairs were locked between solid average points. GBP/USD’s 5-year average and rising line is located at 1.3109 then 1.3361, 1.3448, and 1.3485. At 1.3485 the pair is oversold and forces the 5-year average at 1.3109 higher. A 252 trade range for the week allows GBP/USD to earn the number 1 spot in overall GBP rankings.
The wildcard is GBP/JPY as it sits between the 10- and 15-year averages from 150.31 to 150.78. GBP/JPY averages were dropping and the bottom price for the week was located at 148.09. GBP/JPY must break 151.26, then 151.96 in order to target much higher prices to 155.00’s and top of the range at 157.00’s.
Currently, GBP/JPY is oversold from higher averages and correlates to GBP/USD this week at +81% and up from +60% last week.
NZD/USD from 0.6700’s also sits at neutral from its 5-year average at 0.6843. NZD/USD’s downtrend to begin must break 0.6673 and a 0.6500 target. .Above 0.6843 targets 0.6928 then 0.7247. The target at 0.6504 is currently 200 pips from the current 0.6700’s. NZD/USD has been a dead issue over the past weeks and contained between vital averages.
NZD/USD neutrality forced EUR/NZD and GBP/NZD into a comfortable trade range between EUR/NZD 1.6415, 1.6578, and 1.6832. Currently, EUR/NZD sits between 1.6578 and 1.6832, while GBP/NZD is locked from 1.9179, 1.9463, and 1.9599.
The pairs to watch over this and upcoming weeks are AUD/USD, EUR/AUD, and GBP/AUD. Despite AUD/USD’s neutrality, 0.7101 must break to move AUD lower. AUD/USD achieved its target at 0.6900’s from 0.7300’s and is now in an uptrend. AUD/USD dropped 400 pips from 0.7300 and rose 200 pips to 0.7100’s.
The EUR/AUD’s 2 major lines moving lower are 1.5810 and 1.5773. EUR/AUD trades below. Deeply oversold GBP/AUD moving higher forces AUD/USD lower, however on a long only strategy, to target lower 0.7200’s.
USD/CHF and USD/JPY begin the week oversold and the deciding factors are 0.9210 and USD/JPY 112.70 while USD/CAD as this week’s odd ball currency in the trifecta, begins the week overbought.
USD/CAD is stable inside 400 pip ranges from 1.2204 to 1.2612 and 1.2612 to 1.3036 and no changes over the past weeks. GBP/USD 1.3109 and USD/CAD 1.3026 as defining points to overall currency markets are expected to hold this week.
USD/JPY is the best trade due to wide ranges and easily targets 113.97 and 114.11 then shorts target 113.40. USD/JPY weekly trades offered over the past 4 and 5 weeks are the exact same trades as entries around 114.00’s and targets at 113.31. No different this week to locked ranges.
DXY opens the week at 96.05 and a break at 95.52 changes USD to shorts. DXY ranges at 164 pips are located from 95.52 to 97.16
The 10-year yield begins the week at 1.482 and broke the range as posted Oct. 31 at 1.4941 to 1.5182 yet held the larger range from 1.2290 to 1.6146. Since Oct. 11 when the 10-year traded to 1.6146, the bond dropped 12 points and 36 points from 1.7050 over the past 3 months.
Overall, currency markets begin the week fairly average yet stable within ranges as no big breaks are expected.