The result to DXY’s bounce from crucial 99.00 and 100.00 supports is averaging below build against the 100 levels. As DXY trades higher, then more supports build below.
The problem to a higher DXY is averages are already contained at every 100 pips above the current price from the downtrend at 114.00’s. DXY and USD currencies are trapped between averages building below and those averages already in place on the topside.
Trapped for DXY refers to 100 pip ranges and a severe slowdown to currencies and all market prices until DXY breaks from tiny ranges. SPX traded `119 points last week and the lowest range for the past 5 weeks.
Despite the 2 week rise for DXY, the short only program remains for USD/JPY and long EUR/USD, GBP/USD, AUD/USD and NZD/USD. Higher DXY offers many more pips to USD/JPY shorts and EUR/USD longs.
From DIY’s close at 103.58, DXY will struggle to move higher than low 104.00’s, and supports exist at 103.56, 103.31, 103.25, and 102.45. Below 102.45 begins the DXY and USD downtrend again.
On the opposite side is EUR/USD, AUD/USD, and NZD/USD. As DXY travels higher, averages build against a higher EUR, AUD, and NZD. AUD and NZD are most affected as AUD, and NZD ranges are the exact complement to DXY.
AUD/USD, for example, trades 0.6886 to 0.7007 or a 121 pip range, while NZD/USD, from vital 0.6301 to 0.6492, trades 191 pip range.
The Week Ahead
USD/JPY averages are rising slowly against DXY. Last week’s 129.65, for example, is this week’s 130.24, then begins oversold. The overall range remains 124.88 to 133.34 and 133.46.
JPY Cross Pairs.
In JPY cross pairs seen most specifically, the DXY effects of USD/JPY averages rising against EUR/USD averages dropping. JPY cross pairs this week are all oversold and oversold to USD/JPY’s far to the high price at 131.00’s.
The USD/JPY and JPY cross-pair trend is lower, but JPY cross-pairs are caught in the DXY compression ranges. Most specific to reduced ranges is seen in AUD/JPY, NZD/JPY and CAD/JPY as all trade 1/2 to EUR/JPY and GBP/JPY.
Inside EUR/JPY and GBP/JPY prices are built in ranges and always wider than AUD/JPY, NZD/JPY, and CAD/JPY to force JPY cross pair movements and to claim leadership positions.
GBP/JPY trades 156.16, 158.85, and 160.84. EUR/JPY 135.50, 138.25, 141.01. Bottom averages are dropping; however slowly, a short only strategy remains the only way forward.
GBP/JPY targets 158.80 and 140.14 for EUR/JPY. The overall lazer focus is GBP/JPY 156.16. EUR/USD trades oversold and safely above 1.0608 inside the current price path from 1.0591, 1.0608, 1.0673, 1.0753, 1.0834, and 1.0914.
USD/CAD not only fails to follow DXY properly and caught in 200 pip ranges for the past 2 months, but CAD ranges are reaching their peak and warrants a breakout. For the week, USD/CAD is oversold and travels higher on a break of 1.3387.
Inside USD/CAD’s price is pure noise as measured by an extraordinarily high Noise Ratio vs. a low variation. USD/CAD must trade to at least 1.3500’s or 1.3000’s to relieve the mounting noise pressure and offer wider variation to present 200 pip ranges. Failure to trade wider ranges continues higher Noise tensions to warrant a massive one shot move.
USD/CAD’s big break for lower on a longer-term view remains 1.3131, and no changes over the past 2 months. Target (NYSE:TGT) on a break is now 1.2901 from 1.3000’s. EUR/CAD 1.4039, 1.4201, 1.4315 and 1.4524. Over the past month, the change to EUR/CAD averages is about 200 pips.
GBP/CAD targets easily 1.6184 on a break of 1.6144. Long is the only strategy. GBP/USD requires a break at 1.2061, then targets 1.2156, 1.2367, and 1.2578. EUR/AUD trades 1.5362, 1.5407, 1.5577. GBP/AUD begins the week deeply oversold and easily targets a high 1.7400’s.
Crude Oil WTI Futures high target last week was 81.32 and traded to 80.32 from 72.26. WTI for the week on the highs side targets again 81.35. SPX targets last week at 4222.00 fell short by 40 points as SPX traded to 1.4177 highs. This week, SPX targets 4197.42.