Inflation released this week is expected a difference of 0.1 and 0.2. The written analysis over past months was correct and here’s why.
Since Inflation highs in June 2022 at 9.1 and 15 months later to current 3.7, each Inflation release averaged 0.36. The actual drop for each Inflation release was 0.1 and 0.2 and failed to meet or exceed the 0.36 average.
The larger range to Inflation at 1.95 factored to 0.10 = 0.2. The actual release at 0.1 and 0.2 is mathematically correct but more so at 0.1. Because a release at 0.2 = 0.39 and bumps against the 0.36 average.
A lower Inflation rate at 0.1 drops the range number from 1.95 to 1.75 or higher to 2.15. The average at 0.36 changes slightly but Inflation remains released at 0.1 and 0.2 for a very long period of time.
Inflation at current 3.7 Vs the 2.0 target or 1.7 remains a far distance. The target assumes 0.1 released at the next 17 Inflation releases and continually drops. The next 17 Inflation releases factors to 102 announcements at every 6 weeks. The target at 2.0 then forecasts to achieve March 2025 and in line with the RBA’s Inflation forecast to Australia CPI and the BOC in Canada.
Inflation at 3.7 trades oversold and another drop at 0.1 and 0.2 translates to a deeper oversold level which means, a current drop will reveal higher levels at the next 6 week release. Most vital points over the next months are 5.47 and 6.4. Both are vital points to contain Inflation at lower levels.
Inflation at 3.7 and expected to trade higher reveals GDP is slated for an easy 2% fall while Interest rates and Oil will trade higher. Oil accounts for 0.4 or 40% to central bank Inflation calculations.. In Japan, 0.2 or 20% accounts for BOJ Inflation.
Economies will remain deeply depressed. Rather than a restrictive Monetary Policy, the plan to lower interest rates and raise money supplies would skyrocket GDP and economies would prosper again. Powell requires a loose money supply rather than restrictive
The Week
Best and easiest trades over next weeks are found in wide rangers GBP/NZD, EUR/NZD, GBP/AUD and EUR/AUD. Best anchor pairs to trade are GBP/USD and AUD/USD. USD/JPY and JPY cross pairs GBP/JPY and EUR/JPY continue overall as most favored trades and best profits.
EUR/USD and EUR cross pairs is the best trade category for the week. EUR/USD is fine however EUR cross pairs begin the week overbought. EUR cross pairs refers to EUR/JPY, EUR/CAD, EUR/NZD, EUR/AUD and EUR/GBP. The EUR/CHF resolution at 0.9620 determines longs and shorts for the week.
EUR/USD and EUR cross pairs is this week’s drivers to currency markets and to influence prices and direction to Gold, stock indices and yields. GBP/USD and GBP cross pairs will follow rather than lead EUR/USD.
GBP/NZD and EUR/NZD
GBP/NZD targets 2.0596, 2.0280 and 2.0161. GBP/NZD must and will break below 2.0705 and 2.0701. For the week, GBP/NZD ranges from 2.0701 to 2.0819. The GBP/NZD trade strategy is short and short any highs.
EUR/NZD targets 1.7872, 1.7580, 1.7483 and 1.7428. EUR/NZD must and will break 1.7967 in order to achieve trade targets. EUR/NZD begins the week massive overbought with limited upside.
EUR/AUD and GBP/AUD
EUR/AUD opens this week severely overbought and targets 1.6483, 1.6274 and 1.6151. Trade strategy is short to target the break at 1.6594. No such concept as upside exists this week for EUR/AUD. The bare minimum and easy target for EUR/AUD is 1.6675.
GBP/AUD targets 1.9036, 1.8779, 1.8728 and 1.8658. GBP/AUD for the week trades 1.9244 to 1.9120. The required break for lower is 1.9120.
EUR/CAD and GBP/CAD
EUR/CAD opens the week deeply overbought and no upside exists. Typical EUR/CAD to target 100 ish pips lower at 1.4688 and 1.4645.
GBP/CAD ranges from 1.6835 and 1.6849 to 1.6959. GBP/CAD big line exists at 1.6894. GBP/CAD’s best target is located at 1.6713.
Overall, EUR/CAD and GBP/CAD are performing their natural functions to range as nothing exciting exists to target except 100 pips lower.
EUR/JPY and GBP/JPY
EUR/JPY again drives GBP/JPY and JPY cross pairs. EUR/JPY opens the week overbought and targets 160.50. No upside potential exists for EUR/JPY as shorts for the week is the only trade strategy.
GBP/JPY also begins the week overbought and targets lower 184.00’s. GBP/JPY overbought is the first within the last 3 weeks at oversold levels.
EUR/USD, GBP/USD, AUD/USD
EUR/USD for the week and long term trades oversold and targets the break at 1.0704 then 1.0792, 1.0873 and 1.0963. EUR/USD problem this week is overbought EUR cross pairs. Lower for EUR/USD presents a great opportunity for longs.
GBP/USD next target at 1.2294 then a big line break at 1.2335 to target 1.2457 and 1.2548.
GBP cross pairs trade neutral to open the week and in search of direction. EUR will provide the direction.
AUD/USD short and long term trades deeply oversold. Long is the only trade and only direction. This includes this week and long term. The overall target is 0.6505 and this is just the beginning to the significant upside potential for AUD. Look for middle 0.6400;s this week as targets.
USD/JPY
Short remains the strategy and constant weekly program until low 140.00’s trade. The downside potential for USD/JPY is enormous. USD/JPY short, medium and long term trades massive massive overbought. The target at 140.00’s is bare minimum. For the week, USD/JPY targets low 150.00’s.
USD/EM
USD/INR, SGD/MYR and USD/MXN trades overbought to begin the week while oversold applies to USD/CZK, USD/DKK, USD/MYR, USD/RON, USD/HUF.
Brian Twomey
Tianzuida ON TRADING 