Tuesday’s Inflation story was an anchor pair event as US Dollar Index traded 213 pips then EUR/USD and GBP/USD matched DXY at 213, USD/CAD 221 and USD/JPY at 308 pips. NZD/USD traded an extraordinary 175 pips to AUD/USD at 145.
Missing in action was cross pairs as EUR/AUD traded 140 pips, GBP/JPY 185, EUR/NZD 94, EUR/CAD 107, EUR/JPY 139 and 148 for GBP/AUD.
Cross pairs traded barely above 1/2 DXY ranges compared to anchor pairs EUR/USD and GBP/USD. GBP/AUD and EUR/JPY were Wednesday’s range winners at 172 and 218 pips.
Dow Jones
The Dow Jones Industrial Average dropped 1000 points. On a 31,000 price, 1000 points lack classification to a move. The Dow must travel at least 5,000 points to have meaningful significance. The Dow at 1000 points is a media story rather than a market event.
Next Week
EUR/USD is expected close on Friday at 0.9986, then range from 1.0110 to 0.9986 and 0.9986 to 0.9863. Next week’s long target is 1.0110. Deeply oversold EUR/CHF at 0.9600’s lies just below EUR/USD’s price and holds as EUR/USD supports.
Higher EUR/USD must clear 1.0233 to target easily 1.0300’s. DXY is expected to trade from 110.64 to 107.13. At 110.64 remains below the 110.78 highs from 40 and 50-year monthly averages, while 107.13 breaks to new lows.
The overall market story is EUR/USD Vs. USD/JPY and DXY. USD/JPY serves as the best proxy for DXY. Both are the same currencies, which are massively overbought, short and long-term.
Expected close for USD/JPY at 142.27, then means short next week to target 140.00’s and 139.00’s. Any price above 142.27 is a gift for extra pips to shorts in the vicinity of 143.64.
GBP/USD at the 1.1576 expected close, then ranges next week from 1.1380 to 1.1576 and targets just below 1.1770’s. GBP/CHF at 1.1100’s holds GBP/USD as support.
AUD/USD is running into range problems. Tuesday’s 145 pip day was an oversold story, while last days, AUD/USD traded 50 pip days. AUD/USD’s magic number for higher is 0.6930.
Massively oversold NZD/USD targets next week around 0.6165 on entry anywhere. NZD/USD is the best trade rather than AUD/USD as AUD/USD will underperform NZD/USD.
GBP/JPY 163.35 and EUR/JPY 139.76 hold JPY cross pairs from the big drop. Add USD/JPY at 136.00’s.
JPY cross pairs began the week deeply overbought and remain deeply overbought for next week on a short-only strategy.
To 24 Hour trades were added EUR/CHF and GBP/CHF for 14 currency pairs. EUR/CHF was added to weekly trades for a 22 currency pair total.
EUR/CAD close at 1.3045 may not trade, which means EUR/CAD relegates again to last place in the trade rankings. Same story as last week. GBP/CAD so far is the better long trade for next week to target just under 1.5300’s.
EUR/NZD, as written last week, began the week overbought and traded higher this week. EUR/NZD trades in the stratosphere overbought. Good short trade to target 1.6400’s.
GBP/NZD at 1.9164 is or die approach as 50/ 50 exists to guess longs or shorts. GBP/NZD last week was deeply oversold at 1.8900’s and traded 300 pips higher to 1.9200’s.
GBP/NZD Vs. EUR/NZD extreme divergence existed to oversold GBP/NZD Vs. overbought EUR/NZD. GBP/NZD resolution of 1.9164 may resolve the divergent problem for next week.
EUR/AUD 1.4771 holds EUR/AUD higher. Short next week at 1.4900’s to target low 1.4800’s. Not much excitement about EUR/AUD.
GBP/AUD is materializing as the better long trade to target the middle 1.7100’s, but like EUR/AUD, no thrills exist to GBP/AUD.
It is expected to be a typical trade week without violent swings.