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EUR/USD, G10 and Emerging Market Break Points

Brian Twomey Brian's Investment

Oct 28 post spoke to JPY cross pair Neutrality and stay away due to expected underperformance. This call was correct viewed from signal pair CHF/JPY as JPY cross pairs traded in small ranges. Now 2 months later, JPY cross pair neutrality contains problems in signal and noise terms and this means current prices, level of exchange rates must move from present locations.

When trending pair CHF/JPY contains problems then it spreads to other JPY cross pairs. AUD/JPY and CAD/JPY this week adds to already severe problem EUR/JPY. Overall, 4 of 6 JPY in G10 cross pairs enters problem pair status and quite unusual for AUD/JPY.

To assess USD problem pair status as it pertains to 3 of G10 currency pairs and 21 emerging market pairs for a total of 24 currency pairs then only USD/CHF, USD/KRW, USD/SGD and USD/THB contains problems. Vital USD commentary to USD/CHF and CHF/JPY as this pertains specifically to a big USD move.

EUR is quite another story as only EUR/JPY in G10 contains problems but in 21 total currency pairs in Emerging markets, 10 pairs contain problem pair status. The pairs: EUR/CZK, EUR/DKK, EUR/HUF, EUR/ILS, EUR/KRW, EUR/MYR, EUR/PLN, EUR/RON, EUR/RUB, EUR/SEK, Not only a broad range across continents but many more EUR cross pairs are on the verge to enter problem status.

What partially explains EUR problems is EUR/USD 1.1440 V CAD/ZAR at 10.66. CAD/ZAR is a USD pair and most complete oppositeof all currency pairs to EUR/USD yet both EUR/USD and CAD/ZAR trade at or near Break points. Seen as USD in another way, USD/EUR currently trades at 0.8806 and EUR/GBP as a USD pair trades at 0.8900's. EUR/USD's problem is it trades far to close to USD and not only must but will eventually break from its USD marriage. The EUR/USD marriage is what causes severe problems for emerging market pairs especially when 6 of 10 problem pairs exist in Europe.

Most vital break points below in 29 of G10 pairs then USD and EUR in Emerging Markets. A total of 71 currency pairs offered yet overall system contains 400 more currency pair combinations as any pair matched to any pair.

EUR/USD 1.1440 EUR/JPY 128.96 EUR/CHF 1.1358, EUR/CAD 1.5127 EUR/NZD 1.6855 EUR/AUD 1.5788 EUR/GBP 0.8909.

GBP/USD 1.2844 GBP/JPY 144.77 GBP/CHF 1.2752 GBP/CAD 1.6981 GBP/NZD 1.8923 GBP/AUD 1.7724

AUD/USD 0.7246 AUD/JPY 81.69 AUD/CHF 0.7195 AUD/CAD 0.9582 AUD/NZD 1.0674

NZD/USD 0.6790, NZD/JPY 76.54 NZD/CHF 0.6742 NZD/CAD 0.8980

USD/CAD 1.3224 CAD/JPY 85.25, CAD/CHF 0.7509 CAD/ZAR 10.66

USD/CHF 0.9928 CHF/JPY 113.54

USD/JPY 112.73

USD Emerging Markets

USD/BRL 3.8550, USD/CNY 6.8607 USD/CZK 22.57 USD/DKK 6.5229, USD/HUF 282.49, USD/IDR 14598.86

USD/ILS 3.7054 USD/INR 71.33 USD/KRW 1123.59 USD/MXN 19.92 USD/MYR 4.1514 USD/NOK 8.4353

USD/PHP 53.01 USD/PLN 3.7555 USD/RON 4.0702 USD/RUB 66.0920 USD/SEK 9.0196 USD/SGD 1.3706

USD/THB 32.8000 USD/TRY 5.3965 USD/ZAR 14.1063

EUR Emerging Markets

EUR/BRL 4.4101 EUR/CNY 7.8473 EUR/CZK 25.8253 EUR/DKK 7.4610 EUR/HUF 323.1085

EUR/IDR 16700.7436 EUR/ILS 4.2383 EUR/INR 81.5993 EUR/KRW 1285.2968

EUR/MXN 22.7854 EUR/MYR 4.7486 EUR/NOK 9.6477 EUR/PHP 60.65 EUR/PLN 4.2955

EUR/RON 4.6556 EUR/RUB 75.5983 EUR/SEK 10.3172 EUR/SGD 1.5679 EUR/THB 37.5223

EUR/TRY 6.1725 EUR/ZAR 16.1341

Author

Brian Twomey

Brian's Investment

Brian Twomey is an independent trader and a prolific writer on trading, having authored over sixty articles in Technical Analysis of Stocks & Commodities and Investopedia.

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