FX weekly: DXY 15 currency levels and targets
Week 5 begins with DXY in the usual 101.00 to 103.00 ranges and no end or breakout on the horizon as 103.00's become overbought and oversold at 101.00's. On the opposite side is EUR/USD to begin week 5 in a 300 pip range from 1.0700's to 1.1000 then began the compression of averages to trade 100 pips in each of the past 2 weeks.
GBP/USD's 200 pip ranges from 1.2600's to 1.2800 traded 2 times EUR/USD ranges and the same applies to AUD/USD from 0.6600's to 0.6800's and NZD/USD from 0.6000's to 0.6200's.
Long term targets: USD/JPY and JPY cross pairs
USD/JPY targets 138.08, 131.56, 127.79 and 124.90
GBP/JPY targets 171.90, 165.57 and 162.82
EUR/JPY targets 148.73, 143.09, 140.14 and 138.51
CAD/JPY targets 103.61, 99.34 and 97.12
AUD/JPY targets 93.09, 90.10 and 89.08.
In the July 3rd release of the Tankan Survey on pages 1, 2 and 9, Japan's 9700 businesses and enterprises forecast FY 2023 for USD/JPY at 132.43 and 131.72. EUR/JPY at 140.11.
The overall conclusion to BOJ and Monetary Policy is the derivation to a lower JPY is not seen as valid. The two major threats to the BOJ are YCC and Quantative easing yet both indicators held since 2016 /2017 introductiom. BOJ scheduled bond purchases for FY 2023 are in line to YCC and QE. Possible trade violations to the YCC bands are factored for the BOJ by additional bond purchases.
The above Tankan Survey to the question of Business Conditions bottomed in 2021 /2020 from Covid but since recovered. The Survey is a compendium of questions to Investments, Sales, Profits, Income, employment, inflation. Tankan reveals the overall Business climate for Japan is functioning perfectly.
The concept of Wages is found within Japan's Service sector as Wages and Services aligned closely since 2008 as highlighted by Adachi Seiji in the June 21st speech in Kagoshima.
The JGB 10 year yield held below the YCC 1.50 upper line since 2016 and violated twice by 5 points. The overall JGB yield curve also operated perfectly since 2016 / 2017.
The BOJ since 2016 and 2017 isolated, viewed and revamped every aspect to Japan's Economy and Economic releases. As a result to changes, the BOJ contains full control, persectives and views to Japan's Economy. No mysteries exist as every number is figured, factored and charted from short to long term time horizons.
Add the 2016 / 2017 revisions to Japan's Output Gap. Japan’s quarterly Output Gap is negative -0.34, minus -0.46 for Capital Input, and positive 0.12 for Labor inputs.
For the 6 month view, the potential Growth Rate is +0.32, Total Factor Productivity + 0.46, Capital Stock +0.10, Hours worked minus -0.32 and Number employed + 0.8.
The general view to the Output Gap is a positive reading means higher Inflation as the Output Gap is a total measure of prices. Lower Inflation to a negative Output Gap.
Only radical changes to the BOJ would force USD/JPY and JPY cross pairs lower yet the BOJ is operating to perfection and no changes are required. USD/JPY lower will derive from the ECB and FED.
The week
GBP/NZD below 2.0679 targets 2.0505 and 2.0331 then to 2.0157.
EUR/USD to trade higher must break 1.0943 to target 1.001 and 1.1058. Lower at 1.0876 targets the vital break at 1.0851. EUR/USD begins the week overbought and 1.0851 is expected to hold.
GBP currencies across the board are overbought as GBP/USD, GBP/JPY, GBP/NZD, GBP/CAD, GBP/AUD and GBP/CHF. Best trades are located within GBP/JPY, GBP/NZD, GBP/CAD and GBP/AUD.
USD/JPY and JPY cross pairs begin the week oversold and continuation to the 6 month strategy as shorts only. JPY cross pairs include a vast majority as EM currencies arranged as Other Currency / JPY.
GBP/USD vital levels are located at 1.2553, 1.2637 and 1.2863. GBP/USD for the week is expected to trade from 1.2863 to 1.2637.
GBP/CAD and EUR/CAD begins the week overbought. GBP/CAD is the best short as GBP/CAD trades wider ranges than EUR/CAD.
EUR/AUD targets 1.6173 and 1.6044 and begins the week overbought while overbought GBP/AUD targets easily 1.9097.
AUD/USD targets an eventual break above 0.6697 to then target 0.6730 and 0.6844 to trade within a larger range from 0.6697 to 0.6904.
NZD/USD trades from 0.6185 to 0.6393. The RBNZ strategy is short below 0.6185 then long.
For the week overall, currencies and market prices range to hold the 5 week pattern.
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.
