Currency cross rates as exchange rates comprise 2 currencies which are generally 2 opposing currencies, such as EUR/USD and USD/CAD combining EUR/CAD. EUR is the risk side of EUR/USD, while USD/CAD represents the USD side as opposite. Both EUR/USD or USD/CAD as anchor currency pairs, serve as the main drivers of EUR/CAD prices.
The premiere indicator for price drivers are correlations which provide mathematical proof to anchor pair drivers. Correlation enables us to know, for example, if EUR is in control of its cross pairs, and is a double trade located as EUR/USD and EUR/CAD, or USD/CAD and EUR/CAD. It also informs as to whether currency markets are trading in a risk on mode or favor USD as non risk.
This information is vitally important because markets trading as risk on mode with EUR/USD and EUR/CAD positive correlations contain wider ranges and more profit potential than USD/CAD and EUR/CAD.
Correlations never disappear from markets and they are impossible to exclude from currency pairs, as a correlational determination must always exist and be found by moving averages. A correlation is the hidden number from 1.0 to -1.0 and flows in and out of currency prices.
JPY cross pair correlations to USD/JPY relinquished control in favor of anchor pairs such as EUR/JPY to EUR/USD, AUD/JPY to AUD/USD. EUR/USD and AUD/USD are rightful owners to EUR/JPY and AUD/JPY, so the universe of cross pairs are correctly trading as one unit.
USD/JPY as an insurgent currency commits a treasonous act to subvert EUR/JPY to its positive correlation side.
USD/CAD’s long held standing as a positive correlation to CAD cross pairs are now gone as correlations have shifted to EUR/USD and EUR/CAD +85%, AUD/USD and AUD/CAD +86%, GBP/USD and GBP/CAD +82%, NZD/USD and NZD/CAD +96%.
How strong is the shift? USD/CAD vs GBP/CAD -58%, USD/CAD vs EUR/CAD -64%, USD/CAD vs AUD/CAD -66%, USD/CAD vs NZD/CAD -90%. The correlational shift is solid as a rock.
Currency markets are experiencing massive changes by correlational shifts as cross pairs retain their rightful positions to original anchor pair owners. The FX word for correlational shifts is realignment, as the first side of the exchange rate realigns from subversives to rightful owners.
Early warning signs of correlational shifts are range and price noise vs variation problems to cross pairs. Current offenders are GBP/CAD, GBP/NZD, AUD/NZD, EUR/AUD, GBP/AUD, USD/CHF, and EUR/GBP.
Long term trade forecasts hold for 3 to 4 and 5-ish months. Depends on movements.
USD/CAD
USD/CAD oversold supports below are located at 1.2840 and 1.2853. USD/CAD at 1.2900’s is just ahead of the 5 year average at 1.3034. A break at 1.3034 longer term targets 1.3465.
The problem with a 1.3034 break is GBP/USD at 1.3200’s is not close to its 5 year average break at 1.3111 and USD/CAD is overbought from longer dated averages from 1.2600's and 1.2300’s.
Any price above 1.2893 is open to shorts to an eventual break at 1.2850 and 1.2840 to target 1.2738.
Nothing happening to USD/CAD long term and no brainer trades. USD/CAD serves its current purpose as day and weekly trades.
EUR/CAD
EUR/CAD is trading in a range, from 1.4482, 1.4523 to 1.4628, 1.4663 and 1.4696. Massive hurdles continue as the next above targets are at 1.4724, 1.4860, then 1.4910.
Long term target trades don't exist. The best trades are daily and weekly. The only positive would be if EUR/USD were to travel higher and then EUR/CAD trades follow.
Weekly trade: short 1.4667 and 1.4677 to target 1.4599. The weekly entry coincides perfectly to day trade tops at 1.4656.
GBP/CAD
GBP/CAD trades from 1.7047 to 1.7131. Above 1.7131 becomes 1.7131 to 1.7229 and 1.7241. Below 1.7131 targets 1.7070. Below 1.7047 targets 1.6955. GBP/CAD is the least favored of all CAD trades offered today.
AUD/CAD
AUD/CAD is the top exchange rate pair for the AUD universe and AUD/CHF, the bottom, while AUD/USD and AUD/JPY are middle currency pairs and trade between AUD/CHF and AUD/CAD.
AUD/CAD hurdles are located at 0.9193, 0.9312, and 0.9446. Above 0.9312 targets 0.9376. Above 0.9446 targets 0.9602. AUD/CAD’s overall target is 0.9376 and a long drop trade strategy. A long drop strategy pushes AUD/USD higher. AUD/CAD is the best of the CAD trades.
NZD/CAD
NZD/CAD lacks any ability for long term trades. The lineup is as follows: 0.8690, 0.8740, 0.8794, and 0.8866. Current NZD/CAD trades that are on the verge of 0.8740 are at a do or die inflection point. Above 0.8740 targets 0.8790, below 0.8740 targets 0.8702. Instead of long term target trades, range trades are the order of the day.