FX Weekly: DXY 111.00's Decides the Week

DXY from the 110.67 close faces massive resistance throughout 111.00’s from 111.04, 111.19, 111.66 and 112.10. Above 112.10 targets middle 113.00’s then short. Failure to break 111.00’s targets 108.00’s.

From current 110.67, targets at 116.00’s drops from contention in favor of 115.00’s as DXY upside is dropping about 100 pips per week. Targets are located every 77 pips and every 72 pips for EUR/USD which means good moves expected this week and EUR/USD will trade almost pip for pip to DXY.

As DXY continues its weekly drop, short USD/CAD and USD/JPY becomes the strategy and long EUR/USD and GBP/USD, AUD and NZD.

JPY Cross Pairs

JPY cross pairs trade severely overbought for 3 weeks running and traveled higher in each of the past 3 weeks. As JPY leader, GBP/JPY broke its 3 year range from 148.00 to 168.00’s and advanced to 171.00’s.

GBP/JPY expedited all JPY cross pairs to trade higher. GBP/JPY now trades overbought from short averages from 5 to 253 days and from long averages at the 5, 10 and 14 year. Target (NYSE:TGT) for GBP/JPY is 168.30’s as oversold doesn’t begin until 166.00’s and 164.00’s.

As USD/JPY 147.43 and EUR/JPY 146.83 trade the exact same exchange rates, the overall strategy is short USD/JPY and JPY cross pairs with GBP/JPY leading all currencies lower.

USD/JPY ranges for the week trades from 145.84 to 148.77 vs last week 145.35 to 148.40. Overbought begins above 148.77.


EUR/NZD Vs GBP/AUD and GBP/NZD

GBP/AUD began the month at 1.7200’s and EUR/NZD at 1.7000’s. While EUR/NZD traded to 1.7500 highs, GBP/AUD crossed above EUR/NZD 1.7500’s and achieved tops at 1.8100’s. As GBP/AUD and EUR/NZD fought the battle of dominance,GBP/NZD was absent as leader to EUR/NZD and its only choice was follow EUR/NZD yet GBP/NZD traded 200 pips for October.

GBP/AUD at 1.8099 trades deeply overbought and matches overbought EUR/AUD while EUR/NZD at 1.7100’s trades massive oversold. GBP/NZD is along to follow EUR/NZD ‘s lead. Much lower for EUR/NZD on a must break at 1.6946.

GBP/USD and Cross Pairs

Oversold GBP/USD for the week vacillates against choices to trade to 1.1700’s or 1.1400’s. On a long term basis, targets are located at 1.1882, 1.2280, 1.2538 and 1.2734. GBP/USD contains ability to trade to 1.1800’s easily.

GBP/USD’s problem for the week is all GBP cross pairs are severely overbought to include GBP/JPY, GBP/CHF, GBP/CAD, GBP/AUD and GBP/NZD.

GBP as EM currencies also trades massive overbought as GBP/ZAR, GBP/TRY, GBP/PHP, GBP/SEK, GBP/NOK, GBP/MYR, GBP/HUF, GBP/BRL. GBP is especially overbought as GBP/CNY.

EUR/USD

Similar to GBP/USD, EUR/USD choices for the week is 0.9950 and 0.9902 then 0.9814 and 0.9809 or break above 1.0020 to target 1.0126. EUR/CHF sits on support at 0.9854 while EUR/JPY, EUR/CAD and EUR/AUD trade severely overbought.

As DXY is losing its upside potential, we remain long only to strategy Vs EUR/USD and GBP/USD.

USD/BGN

The Bulgarian Lev (which is pegged to the Euro) is inching closer by the week to break 1.9538 and target 1.9342.

AUD/USD trades 0.6459 to 0.6335 and NZD/USD 0.5801 to 0.5681. Lows trade only if DXY breaks above 111.00’s.

DXY 111.00’s are the deciding factors for the week to drive every financial instrument on this planet.