FX Weekly

As DXY traded massive overbought over the past 3 and 4 weeks without a correction, AUD/USD and NZD/USD were directed to trade current Richter Scale oversold levels. So oversold, no such concept as shorts exist for AUD and NZD as NZD/USD trades oversold from 0.6100, 0.6300, 0.6500’s and 0.6800. AUD/USD trades oversold from 0.6600’s to 0.7500’s.

AUD/USD’s first priority is break above 0.6604 to trade the range from 0.6604 to 0.6867. AUD/USD targets are located at 0.6671 and 0.6801 on long only strategies.
NZD/USD must and will eventually break 0.6105 to trade the range from 0.6105 to 0.6356. NZD/USD immediate targets are located at 0.6202 and 0.6292.

Not only are AUD and NZD targets easy to achieve but far more upside potential remains for both currencies.

Massive oversold AUD/USD and NZD/USD provides further confirmation to overbought wide rangers as GBP/AUD, EUR/AUD, EUR/NZD and GBP/NZD.

DXY provided the capability for massive oversold AUD and NZD while wide rangers were allowed to travel to extensive overbought levels.

DXY nor only traded in constant overbought levels over the past 3 weeks without a significant correction or meaningful downside move but DXY over the past 5 weeks averaged 81 pips per week Vs EUR/USD at 86 pips.

GBP/JPY averaged 113 pips for the past 5 weeks to USD/JPY at 177 and GBP/NZD at 208. SPX 500 averaged 101 points per month for the past 9 months.

DXY is the driver to SPX as SPX won’t trade above DXY ranges.

Most vital economic announcements this week is not Jackson Hole nor PMI’s as both are irrelevant and PMI’s are duplicate releases and completed by GDP, CPI, Producer Prices, Imports and Exports. PMI not only doesn’t move markets but its a commentary on nothing. My advice is don’t allow these people to insult your good intelligence as they did to others over the years.

Most important announcements this week are NZD Imports and Exports, EUR Producer Price Index, CHF Imports and Exports. Most vital is the monthlies rather than yearly focus.

This week ends the 3 week major economic announcements began July 27 after the Fed on July 26. Remaining releases are minor and irrelevant as markets prepare for the 2nd round of GDP, CPI, Producer Prices, Imports and Exports.

GBP/NZD long term targets 2.0717 and 2.0448 and this is just the beginning to longer term targets.

GBP/USD many and massive supports are located at 1.2674, 1.2663 and 1.2646. Current GBP/USD trades from 1.2663 to 1.2871. Overbought this week begins above 1.2792.

GBP/USD problem this week is overbought GBP/AUD, GBP/NZD, GBP/CAD, GBP/JPY.

EUR/USD higher must break 1.0918 and 1.0958 to target 1.1046 as the best long term target. EUR/USD trades oversold particularly from longer averages. EUR/USD remains on a long only strategy as overbought this week begins at 1.0973 and EUR/USD contains ability to achieve this level.

USD/JPY on a break at 144.88 targets 143.00′ s easily. At 141.55 is required to break and trade lower levels.

USD/JPY ranges this week 146.34 to 144.33 or 201 pips. Last week, USD/JPY traded 191 pips.

JPY cross pairs trade neutral to oversold.

GBP/CAD at 1.7200’s achieved overbought again and short is the only trade to target low 1.7100’s easily. Overbought EUR/CAD follows GBP/CAD lower.

10 Year Treasury Yield must break 4.23 to target 4.1285 and 4.1193. The further break at 4.144 targets 3.91 and 3.9008.

The overall requirement for this week is much lower DXY and to break the many supports built into the price since the upswing from 99.00’s. The same overbought 103.00 to oversold 102.00’s are current ranges. We need DXY to trade low 102.00’s and hold in order for resistance levels above to build into the price.

Brian Twomey

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