USD/JPY begins the week fairly neutral to overbought inside a range from short 150.51 to long 148.49. For the 3rd week running , GBP/JPY and EUR/JPY trade oversold. GBP/JPY’s vital break at 180.52 trades 99 pips from the 181.51 close while EUR/JPY trades 107 pips from the vital break at 156.01. Neither EUR/JPY nor GBP/JPY is expected to cleanly break this week.
AUD/JPY was first to break lower at 94.33 and this level will become important this week to longs and shorts. NZD/JPY sits just above 87.75. CAD/JPY contains a long way to break 107.73 to trade much lower while the same applies to CHF/JPY at 162.04 and USD/JPY at 145.96.
The positive to the USD/JPY vs JPY cross pair situation is USD/JPY continues to correlate to all JPY cross pairs.
EUR/JPY for example correlates to USD/JPY at +93% and -67% to EUR/USD. GBP/JPY correlates to USD/JPY at +88% and to GBP/USD at – 39%. AUD/JPY correlates to USD/JPY at + 97% and – 93% to AUD/USD. NZD/JPY correlates to USD/JPY at +97% and – 93% to NZD/USD.
CHF/JPY remains at solid correlations to USD/JPY at +93% while CAD/JPY represents the weak link to USD/JPY at +98% and +77% to USD/CAD.
United States Import and Export lines are pointing up and tracking higher. The Export line tracks higher from a much lower level than the import line. CPI as a result reported higher month to month from 0.3 to 0.4 and 3.7 from 3.6 yearly.
The import and export lines were valued at 0.10 for Inflations. Expect remaining CPI releases for all nations to report a 0.10 difference. Monetary Policy is the same exact concept as Import and Export Lines.
Import and export lines inform PPI will drop month to month on the next release and GDP remains stagnant to lower.
The Week
EUR/USD not only trades massive oversold but the EUR universe also trades oversold as EUR/CHF, EUR/JPY and EUR/CAD. EUR/AUD and EUR/NZD trades overbought. EUR/GBP closed exactly on vital 0.8644.
EUR/USD targets 1.0561 and 0.9571 for EUR/CHF. Longer term, EUR/USD targets 1.0657 and break at 1.0694 to target 1.0823 and 1.0903.
GBP/USD begins the week the same scenario as EUR by trading deeply oversold and massive oversold to GBP/CHF, GBP/JPY, GBP/CAD and GBP/NZD.
EUR/NZD lower must break 1.7778 and GBP/NZD at 2.0568. EUR/NZD must trade to minimum 1.7713 and 2.0536 for GBP/NZD.
GBP/AUD targets minimum 1.9022 and 1.6419 for EUR/AUD.
AUD/USD begins the week oversold and targets 0.6400’s while oversold to the AUD universe applies to AUD/CHF, AUD/NZD must break 1.0752 to travel higher and 0.8761 for AUD/CAD.
AUD/JPY below 94.33 targets 93.43.
NZD/USD oversold matches NZD/CHF and NZD/CAD. NZD/CAD targets 0.8118 and 0.5390 for NZD/CHF.
Overbought USD/CAD targets the break at 1.3547. CAD/CHF trades oversold and fairly neutral for CAD/JPY between 109.89 to 108.81.
USD/CAD’s best moves are seen when the CAD/CHF and CAD/JPY relationship aligns as both oversold or overbought. USD/CAD then moves well as the opposite currency to CAD/CHF and CAD/JPY.
USD/EM
Severely overbought USD/CZK targets 23.2243 easily from 23.5016. USD/DKK targets 7.0610 easily from 7.0960.
USD/HUF targets 367.18. USD/NOK targets 10.8805 from 10.9626. USD/RON targets 4.7039 from 4.7261.
The vast majority of USD/EM currencies trade overbought and matches overbought to USD/JPY and USD/CAD.