FX next week: DXY, EUR/USD and GBP/USD

The comclusion to yesterday's probabilities for central banks to change interest rates are permanent probabilities as 23% to 77%. One step further is 23%, 50% and 77%. Any forecasts above 77% and below 23% is wrong.

The currency wars of the 1930's and Bretton Woods 1% exchange rates taught us the modern day market concept to Competitive Advantage. Interest and exchange rates must maintain balance and alliances to each other's central bank rates. An interest rate adjustment to a central bank requires an equal reaction from all central banks to maintain Competitive Advanrtage. This explains the permenent probabilities.

The 1930's Currency Wars experienced Competitive Devaluations to exchange rates as the French worked exceedingly hard to destroy GBP and drive GBP's exchange rate to zero.

The 30 day interest rate  rate alliance to the main central bank rate is to close to forecast accurately. Market probabilities use Markov Chains or the answer to what is the here and now probabilities. Easier ways exist to forcecast interet rate changes.

USD/CAD traded 64 pips from the BOC interest change or 15 pip minimum to 67 max. This is the new 2022 interest rate arrangement by central banks.

Next week

DXY will again maintain the 104.00 to 103.00 range to gurantee slow market movements. DXY must maintain prices below low 104.00's for decent EUR. GBP and USD/JPY moves. DXY is holding up market movement progress.

EUR/USD vital break for higher at 1.0738 targets easily 1.0800's then the most important break at 1.0900's.

USD/CLP traded 802.40 to 790.75 and Copper 3.8131 to 3.6860. The relationsip traded as USD/CLP 792.65 = Copper 3.8140 and USD/CLP 799.00 to Copper 3.6860.

GBP/USD 1.2343 maintains a slow rise to the eventual break at 1.2587 then the 1.2700 target. GBP/USD 1.2587 won't break higher next week. The best seen so far is 1.2550.

USD/CAD since December maintained a 300 and 400 pip range per month. November was USD/CAD's best range month at a 600 pip range.

USD/JPY becomes severely overbought next week at 104.40. Lows achieved 139.01 this week. Next week again targets low 138.00's and the same targets as this week. USD/JPY must break 137.38 to target lower but a DXY drop must assist otherwise USD/JPY holds to the 138.00 to 140.00 ranges.

GBP/JPY held the 33 year monthly average point at 174.83. A break next week can only offer 175.25. The overall range is located at 600 pips from 169.55 to severely overbought at 174.83 and 175.25.

EUR/AUD achieved the target at 1.5900's as reported in April and prior months. April highs traded to 1.6700's. The target at 1.5900's trade duration was 2 months. Previous EUR/AUD targets at 800 ish pips trade duration was 6 and 7 weeks so EUR/AUD is on track from previous years.

EUR/AUD has easy ability to trade to 1.5800's. Current break for higher at 1.6143 targets 1.6194 and 1.6225. Then short again.

The GBP/AUD performance over the past 2 months failed to mainatin the same paces as EUR/AUD. GBP/AUD traded 1.8600 to 1.9100 or 500 pips for the last 2 months. The bottom at 1.8569 is the exact levels to break for GBP/AUD to trade to the long standing target at 1.8200's.

Over many years, EUR/AUD was always the preferred currency to trade. GBP/AUD is undecided to either trade alongside EUR/NZD and trade dead ranges or trade with GBP/NZD. Trade with GBP/NZD then GBP/AUD hits an explosive day then back to dead range trade days.

EUR/JPY iat the upper 150.00's becomes overbought next week to target 149.79 then 148.63. Both easy targets to achieve.

GBP/NZD traded overbought at 2.0500's. Lows traded to 2.0390 this week. Next week targets 2.0262 then 2.0100's. GBP/NZD is the preferred trade to EUR/NZD as GBP/NZD will outperform EUR/NZD.

GBP/CAD 1.6673 then higher while EUR/CAD trades deeply oversold at 1.4300's.