EUR/USD: Levels, Ranges, Targets

Brian Twomey Brian's Investment

Yellen and the Fed reiterates a desire to raise Fed Funds yet in a strange dichotomy Yellen is against tax reductions. If ever a support existed to raise, tax reduction is the clear winner in a growth economy.

Meanwhile the 2 year yield hits its lowest point of the year yesterday at 1.12. The 2 year in the first week of January traded 1.22, hit highs at 1.27 Feb 15 and drifted to lows at 1.22 upon release of Fed Minutes. From 1.27 highs, the 2 year ranged from 1.12 lows to 1.22. Since Fed Minutes, the 2 year ranged from 1.12 to 1.22.

The significance to the 2 year drop is the overall ranges in short term interest rates are compressing. From 1.22 to Fed Funds, the range becomes 56 basis points and 46 basis points from 1.12. USD is the sole driver to a vast majority of currency pairs, especially EUR/USD and USD/JPY. Compress the ranges further then USD will go dead and volatility will disappear.

More importantly, currency prices are looking to USD for direction and its absent. Trump has nothing to do with this development, Yellen and the Fed are responsible. Commercial Paper rates informs the market holds zero confidence in Yellen and I agree. Most affected currency pair in the G10 is NZD/USD as current ranges are about to explode. The pressure is mounting by the day.

I warned on my blog days ago, the central bank structure in place since June 2016 is undergoing a new phase in their development. What the new structure will look like at this moment is pure speculation. For certain, changes are ahead.

EUR/USD. Yesterday's EUR/USD hit exactly my 1.0630 point and retreated as expected. Yesterday 1.0630 is today 1.0625. Two vital points today are 1.0625 and 1.0684. The point 1.0625 is volatile. A break of 1.0625 then masses of resistance exists from 1.0629 and 1.0648.

The range for today is located from 1.0736 to 1.0544. The points at 1.0625 and 1.0695 are just average line breaks for EUR/USD to head higher. Overall range points for EUR/USD are miles away at 1.0800's to 1.0400's. Same scenario for USD/EUR. EUR/USD is just sloshing around.

Below 1.0544 then next comes 1.0494, 1.0474 and 1.0442.

What's driving EUR/USD is completely USD. What's inside the internal EUR price is absolutely nothing except pure USD. From distribution perspective, EUR/USD reamisn top heavy from current prices. Sell rallies.

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.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.