Currency Market: FX weekly commentary, plus CAD/ZAR and DXY

Currency markets begin the week under compressed ranges and the same old recurring problem for the past 4 weeks. EUR/USD closed last week 1.2180 and 1.2190 this week. GBP/USD closed this week at 1.4179 and 1.4139 last week. AUD/JPY 84.64 this week Vs 84.16 last week. EUR/AUD 1.5793 Vs l.5739 last week.

Best pairs  in the past 3 weeks was wide rangers GBP/NZD, EUR/NZD and GBP/AUD. However, despite wider movements, ranges remain problems as the pairs neglected range points to trade to extreme oversold and overbought.

Currency prices are ranging without significant breaches to vital high low averages. Without convincing and sustainable breaks, currency prices will remain trading in tiny ranges. JPY cross pairs remain deeply overbought and stagnant but USD/JPY trades above 108.17 and EUR/USD above 1.2108. The months long protracted situation must resolve with EUR/USD or USD/JPY trading at opposite ends to vital levels and for JPY cross pairs to get moving lower.

USD/JPY begins the week overbought and a positive for overbought JPY cross pairs as USD/JPY remains solidly correlated to JPY crosses at +90%. EUR/USD begins fairly neutral against a big break above at 1.2240. 

CAD/ZAR as EUR/USD's perfect opposite and running -90% correlations is currently oversold from the close at 11.40 and must break 11.62 to move higher and target 11.75. CAD/ZAR as the traditional best indicator to EUR/USD trades at severely compressed ranges however solidly above 5 and 10 year averages at 10.96 and 10.13. This relationship must break wide open.

Divergence exists to EUR/NZD below 1.6860 from the close at 1.6805 and GBP/NZD above 1.9425 from the close at 1.9555. Divergence leaves NZD/USD at overbought from the close at 0.7242 and the 10 and 14 year averages just above at 0.7267 and 0.7342. The discrepancy in the NZD universe is oversold NZD/CAD yet no chance to move higher unless 0.8854 breaks above from the close at 0.8740.

AUD/USD closed directly on vital 0.7707  while AUD/CHF trades below 0.6975 and deeply oversold AUD/CAD from its close at 0.9313 must cross  0.9502 to consider higher targets. If AUD/USD remains below 0.7707 then AUD/JPY becomes not only the hold out above 83.38 but a good shot to break lower to bring uniformity to the AUD universe.

EUR/CAD from the close at 1.4710 must break 1.4930 and the 5 year average at 1.4965 to trade higher levels while 1.4542 and 1.4448 serve as solid supports.

GBP/CAD from its close at 1.7116 must cross above 1.7199 to trade higher. GBP/CAD is the only GBP pair to trade below while all GBP pairs trade above high/low points. The GBP universe is the only currency trading correctly and without divergence.

GBP/USD and USD/CAD remain the bright spots to a complete divergent currency market as both contain range ability to move far and wide. USD/CAD's close at 1.2066 and GBP/USD at 1.4179 as perfect opposite currencies highlights the wide USD V Non USD divide by a 2113 spread. The spread is extraordinary and must close by GBP/USD much lower or USD/CAD higher. USD/CAD's vital break is located at 1.2333 and GBP/USD at 1.3952.

Lower GBP/USD translates to higher for oversold EUR/GBP however EUR/GBP's vital break at 0.8680 must cross higher for a significant GBP/USD move lower to challemge 1.3952.

USD/CHF will see a significant move at 0.9050 while DXY remains below and depressed at 90.24 and at the 10 year monthly average. From 90.24 then 91.57 and 92.89. The 5 year average at 95.53 provides massive resistance. DXY strategy is long drops until a challenge exists at 95.00s.

USD's 10 year bond yield remains rangebound for the past 3 months between 1.3305 to 1.8448.