FX weekly – Currency market

Brian Twomey Brian's Investment

DXY not only remains massive overbought at 104.00's and trades inside 200 pip ranges from 102.00's to 104.00's for the past 3 weeks but the EUR/USD and DXY line of demarcation is located at 1.0600's. AS DXY traded higher into the 104.00's in dead ranges, EUR/USD consolidated at the lows in compressed ranges.

The only possibility for a EUR/USD and DXY crossover occurred in the period from 1999 - 2002. A near 100% probability exist for DXY and EUR/USD not to cross as the crossover represents a massive change to all markets.

EUR/USD trades oversold and at the bottoms while DXY trades overbought and at the top. The EUR/USD long term target remains 1.1047 while DXY must trade to minimum 102.00's and hold in order for average lines to form above the 102.00 price.

EUR/USD higher must break above 1.0875 and 1.0945 to target 1.1047. The line at 1.0945 is expected to hold this week.

GBP/USD as a follower currency to the EUR/USD and DXY relationship, suffered and traded to lows from the EUR/USD and DXY struggle. As GBP/USD traded lower, ranges became compacted.

GBP/USD also trades at the oversold lows and must break 1.2622 and 1.2667 to target middle 1.2700's.

EUR/USD and GBP/USD requires higher prices to hold in order to create wider trade ranges. GBP/USD closed Friday at 1.2585 and 1.2576 last week. GBP/USD is required to trade an improved performance rather than the past 2 week consolidation.

GBP cross pairs all begin the week oversold however the best GBP/USD could achieved this week is low 1.2700's. As a result to GBP/USD tiny ranges this week, GBP cross pairs are expected to trade continuations lower for the 2nd consecutive week.

GBP/AUD below 1.9600's targets again low 1.9400's. Longer term, overbought GBP/AUD targets 1.8999 and 1.8744.

GBP/AUD Correlates to GBP/USD at +76% and - 94% to AUD/USD. For RBA, the AUD/USD and GBP/AUD relationship represent great trades.

EUR/AUD longer term targets 1.6380 and 1.6190. EUR/AUD's big break for lower at 1.6581 trades 110 pip from current 1.6691 weekly open.

GBP/NZD from August 24, GBP/NZD shorts next week at 2.1485 and 2.1518 targets 2.1352, 2.1229, 2.1086. GBP/NZD below 2.1104 targets 2.1044 then 2.0984. When 2.0864 breaks then targets become 1.0700's easily.

GBP/JPY is expected a continuation lower to 182.00's. GBP/USD and GBP/JPY correlations remain at + 82% and +98% to USD/JPY. The JPY cross pair dilemma is located in the months long Correlations.

USD/JPY ranges this week from 145.23 to 147.24. USD/JPY 144.00's are blocked for this week. EUR/JPY trades 159.00's to 156.00's.

The USD/JPY and yield story is back in focus. Don't fall for this trap nor the USD/CAD Vs Oil fiction. USD/JPY moves 100 pips while yields move 1 point. No meaning exist here.

YCC holds within 0.87 to 1.63 and 13 points above the 1.50 band. The speculation is the relaxation of 1.50 is an Inflation story as was the previous adjustment from 0.25 to 0.50. The BOJ correctly forecasted higher Inflation and adjusted the bands in anticipation to Inflation.

The August / July reports from the BOJ expects Inflation at 2% then much higher over time.

Naoki Tamura speech

Tamura hails from Kyoto in northern Japan. The northern economic conservatives of Japan on the BOJ board lost voting power and majorities to the dominant South in the 1868 Meiji Restoration. And never to control the BOJ or Japan politics and governments ever again as once existed from 794 to 1868.

Tamura's speech last week was typical of the northern conservatives as they don't agree with Monetary Easing, YCC, negative interest rates or the past 100 years of southern BOJ economic experiments.

Despite Tamura's bold words to end monetary easing, YCC and negative interest rates, the words fall on deaf ears.

Oversold AUD/USD targets again 0.6500's and NZD/USD 0.6000's.

USD/CAD not only trades at the top but the top has been in place since 1.3600's and 1.3500's. Higher DXY forced USD/CAD into compressed ranges. USD/CAD must trade lower to create trade ranges. The first big break for lower at 1.3478 targets 1.3200's.

USD/EM

Massive overbought USD/CZK targets 22.2152 from 22.3770. USD/HUF targets 353.0979. USD/SEK targets 10.9422

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.

AUD/USD seems vulnerable near 0.6800, 10-month low amid bullish USD

AUD/USD languishes near a 10-month low during the Asian session on Friday, awaiting a break below 0.6800 before the next leg up amid a bullish US Dollar. Firming Fed rate-hike expectations, along with fading hopes for US-Iran diplomacy, help the USD hold gains at its highest level since April 2025. Moreover, the RBA’s dovish tilt undermines the Aussie and backs the case for further losses.

USD/JPY bulls turn cautious near 160.00 amid intervention risks

USD/JPY enters a bullish consolidation phase around its highest level since early September as bulls turn cautious amid intervention risk near 160.00. Meanwhile, the downside seems cushioned as the wide US-Japan interest rate gap keeps the Yen carry trade active. Furthermore, the possibility of a jumbo Fed rate hike and Middle East uncertainties hold the US Dollar near a 19-month top, supporting the currency pair.

Gold remains on the back foot below $3,900

Gold now alternates gains with losses below the $3,900 mark per troy ounce on Friday. The precious metal struggles to regain traction amid the firmer US Dollar, mixed US Treasury yields and expectations of further tightening by the Fed at its December meeting.

Bitcoin just posted five straight losing weeks, and the storm may not be over yet

Bitcoin is struggling to find support, slipping below $70,000 as multiple headwinds threaten to push the Crypto King lower. The much-anticipated “Uptober” rally failed to materialize, with persistent selling pressure and widespread liquidations instead reinforcing the “Rektober” narrative.

Week ahead – Fed Minutes, inflation data and Nvidia earnings to guide investors

Fed minutes may add to hawkish tone as bets of 50-bps hike grow. Nvidia to report earnings as bar to impress high after spy scandal. Trade and geopolitics to be focal point of Trump-Xi summit.

Gold hit its lowest level of 2026 near $3,850

Gold (XAU/USD) attempts to stabilize around $3,890 on Friday after falling to $3,852 on Thursday, its lowest level since October 2025. The precious metal has lost more than 4% this week, as investors increasingly anticipate further monetary tightening from the Federal Reserve (Fed). The latest decline reflects a sharp change in market expectations.