Get 40% Off
🤯 Perficient is up a mind-blowing 53%. Our ProPicks AI saw the buying opportunity in March.Read full update

FX Weekly: EUR/USD, GBP, CHF Correlations

Published 12/26/2021, 07:15 AM
Updated 09/03/2023, 03:41 AM

Most informed commentary to overall currency markets see cross pairs aligned to anchor pairs. AUD/CHF, for example, is now aligned to AUD/USD by correlations at +99%, NZD/USD to NZD/CHF +99%, GBP/USD to GBP/CHF +99%, and EUR/USD to EUR/CHF +99%.

USD/CAD is correct and a fairly permanent currency market condition vs CAD/CHF at -98%. The rarely seen, yet great shift, to currency pairs is now complete by the CHF switch which means the 2nd side of the exchange rate no longer drives or controls, and correlates to opposite the 2nd sided currencies within an exchange rate.

USD/JPY no longer moves and correlates to JPY cross pairs, USD/CAD no longer moves and correlates to GBP/CAD and 2nd sided CAD, USD/CHF no longer moves and correlates to AUD/CHF and 2nd sided CHF in the exchange rate.

EUR/USD, GBP/USD, NZD/USD, and AUD/USD now correctly correlate to their own cross pairs within the respective universe. A powerful development as the universe now trades together as one unit and it means ranges expand to create more profit potential.

USD/JPY, USD/CAD, and USD/CHF now trade on their own without cross pair assistance and are vulnerable to downside potential and diminished ranges. Besides the DXY and trading above the vital 95.52, USD currency pairs within the 28 pair universe are now reduced to the following 3 currencies: GBP/NZD, CHF/JPY, and GBP/AUD. CHF/JPY, by +90% correlations, belongs to USD/JPY, while GBP/NZD and GBP/AUD negatively correlate -22% to GBP/USD.

USD was once the driving force of currency markets as USD/JPY, USD/CAD, and USD/CHF correlated to 15 of 28 currency pairs. USD/JPY begins the week overbought and oversold to USD/CHF and USD/CAD

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

USD/JPY, USD/CHF, And USD/CAD

Last week’s long trade to target 114.25 and 114.32 traded to 114.50 highs and the short target at 113.41 traded to 114.29 lows. Wednesday's highs at 114.37 traded to 114.05 lows.
USD/JPY weekly trade during the past 6 weeks achieved +900-ish pips for 6 trades.

Lesson for Traders

All 6 USD/JPY trades achieved upside and downside targets. No requirement existed to watch screens, charts, use stops or concentrate on the latest market news. The market price is matched to the mathematical strategy, but never a strategy matched to the price as this never works.

A trader's final destination is to click on Sunday and exit by Friday without regards to price movements. This allows a trader to live life outside markets. Clearly a hard concept to grasp as most traders watch screens all day and don’t know or trust the price. 

USD/JPY this week targets 114.64 and 114.71 then shorts target 113.59. USD/CHF driving price is located at 0.9337 and targets 0.9168, then 0.9253. Historically and from long term models, USD/CHF lives in a constant oversold position year after year.

USD/CAD trades the same weekly story as vital levels are located at 1.2250, 1.2697, and 1.3032. JPY cross pairs for the week are overbought to include Richter scale overbought CHF/JPY.

GBP

GBP/USD traded 1.3437 highs last week with previously hits reported at 1.3445 and 1.3464. Vital levels this week are located at 1.3160, 1.3357, 1.3441, and 1.3459. Concentrations this week are the following favored GBP pairs: GBP/USD, GBP/JPY, and GBP/CHF.

EUR/USD

Longer dated averages remain deeply oversold and targets 1.1423, 1.1438, and 1.1442 just ahead of the vital break higher at 1.1451. The downside target is now 1.1049 and 8 pips higher from last week as bottom averages are rising to explain EUR/USD’s neutrality at 1.1300’s. EUR/USD 1.1277 must break to sustain a downside move.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

DXY

Same position holds as 95.52 to 97.16 and DXY tops at 98.00’s and 99.00’s.

Overall, currency markets this week are heading for range conditions without dramatic price moves.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.