The YCC bands remain at the primary 1.5 to 0.5 vantage points above and below the 10Y to 3m yields. The BOJ’s words were flexible yet rigid to the 10 year. The 10 year yield at 1.5 held inside the bands since 2015 / 2016 implementation but today broke above for the first time by trading to 0.563 or 1.563.
For next week, the JGB 10 year contains easy ability to trade to 0.5964 and 0.6051 to test the BOJ resolve to flexible yet rigid. Inside the upper 1.5 band, the 10 year must trade to 0.50 at minimum but currently big break lines exist at 0.4920 and 0.45.
The lower side to the band at 0.5 is not the issue due to the impossibility to break as BOJ 0.9 interest rates won’t break below anytime soon. The bottom 0.5 side held easily since 2016 implementation to YCC due to the position of BOJ interest rates.
A break of the bottom band at 0.5 requires a BOJ interest rate change lower from 0.9 and any speculation to an interest rate change by the BOJ won’t happen anytime soon as the present Japanese financial system operates perfectly.
The YCC bands in relation to USD/JPY factors as 211.71 vs 94.09 and 282.28 Vs 70.57. USD/JPY then averages to 152.90 and 176.42. The 300 pip move for USD/JPY derived from the 1.5 side of the YCC band at 211.71 Vs 94.09.
The overall context to YCC as fairly irrelevant to USD/JPY is understood from the current JGB yield curve from 3 month to 10 year. USD/JPY as average prices: 141.15, 141.76, 141.84, 142.65, 142.82, 147.45, 155.78.
USD/CAD long term trades from 1.3110 and 1.3171 to 1.3300 and 1.3325. USD/CAD for the past 7 weeks traded within the 1.3000 – 1.3300 range and this range will hold for weeks to come. A break of 1.3110 places USD/CAD in a 251 pip range from 1.2859 to 1.3110.
USD/CAD’s trade strategy over next months is short the highs near 1.3300’s and long bottom as range trades is the only strategy available.
EUR/USD supports below are located at 1.0969, 1.0972 and 1.0979. The strategy for the week is long to target 1.1109 and just prior to vital 1.1131. EUR/USD overall range is located from 1.0979 to 1.1131. The wider range is located at 1.0972, 1.1131, 1.1353 and 1.1598.
DXY again for week 2 is trapped between low 101.00’s and overbought at low 102.00’s. DXY caught between averages is enough for markets to range trade next week and hold up progress to break vital levels.
EUR/USD Vs DXY
EUR/USD 1.1096 Vs DXY 100.86
EUR/USD 1.1138 Vs 100.44
EUR/USD 1.1223 Vs 99.60
GBP/USD higher must break 1.2879. GBP/USD ranges from 1.2702, 1.2762 and 1.2879 to 1.2923. GBP/USD overbought for the week begins above 1.2923 amd short is the only strategy.
EUR/AUD and GBP/AUD
Both EUR/AUD and GBP/AUD begin the week deeply overbought and entries are located Anywhere to target EUR/AUD 1.6469 and 1.6379 on a break of 1.6469. Longer term EUR/AUD targets 1.6076 on a break of 1.6288. GBP/AUD targets easily 1.9169 then 1.9007.
USD/JPY targets a break at 141.21 then 140.14. USD/JPY’s big break for lower is located at 139.07.
EUR/JPY targets 154.64 and 152.71 must cross lower to trade 150.00’s.
GBP/JPY targets 179.50 and 176.71 is required for much lower prices. The line up for monthly averages trades between the 34 to 38 year averages from 176.61, 178.02, 179.57, 181.07 and 184.14.
The overall trade strategy for USD/JPY and JPY cross remains short until USD/JPY trades 131.00’s and 128.00’s.
GBP/NZD and EUR/NZD
Both GBP/NZD and EUR/NZD trade massive overbought for the week as shorts is the only strategy. GBP/NZD must trade to minimum 2.0687 from 2.0865 then the next big line at 2.0512. GBP/NZD longer term targets 2.0240 and 2.0014.
EUR/NZD for the week targets easily 1.7761 then 1.7707.
GBP/CAD next vital line above is located t 1.7098 and shorts target 1.6968. GBP/CAD’s overall range is located from 1.7098 to 1.6961 and 1.6860.
EUR/CAD for the week is not favored. The vital break is located at 1.4600 to target 1.4659.
AUD/USD remains inside 0.6741 to 0.6905 and no changes over many weeks. AUD/USD trades deeply oversold and targets easily 0.6823 and 0.6848. Overbought EUR/AUD is strangling AUD/USD ranges. EUR/AUD must trade lower to assist wider ranges to AUD/USD.
NZD/USD trades against massive range problems and troubled by the same situation as AUD/USD. Overbought EUR/NZD poses the main range dilemma. EUR/NZD must trade lower to open wider ranges for NZD/USD. NZD/USD big break for higher is located at 0.6221. Long only trade strategy applies to NZD/USD and AUD/USD.