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FX weekly: Imports and exports, XAU/USD and 14 currency levels and targets

DXY's 4 and 5 year average sits at 99.28 and 99.00. DXY opens the week at 104.29 and vital levels above exist at 104.40, 104.60, 105.25 and  106.72. DXY's price is overbought, to high and has a long way to drop.

DXY next averages below 104.60 are located at 103.66, 101.13, 99.28 and 99.00. Next target below 103.66 is found at 102.06.

DXY and the Fed however shares many problems. DXY Vs Fed Funds statistical correlations trades extremely low from 1 to 5 year averages at +41%, +13%, +56%, +64% and +62%. Correlations should trade easily at +80 and +90%. DXY and Fed Funds are severely underperforming and must move to correctly achieve higher and normal correlations.

While Import and Export lines correlate perfectly from +80% and 90%,  low Correlations to DXY and Fed Funds feeds directly into low correlations to Import and Export lines. DXY vs Import Correlations run from 5% to 64% while Exports run 15% to 68%.

Fed Funds Vs Import and export lines 3 weeks ago from 1 year averages ran +78% and +45% to Exports and today -16% and -56% to Exports.

DXY's non movements and current levels are far to high as DXY traded 246 pips for the past 4 weeks and from 102.00's to 105.00's.

XAU/USD is driven clearly by Import lines at correlations from 1 to 5 year averages at -67%, -52%, 6%, 21%, 47%. Exports = -34%, -61%, -4%, +15%, +47%.

The Import line is the Commodity line and the clear driver in every nation  to economics and market prices especially currencies and all commodities.  Import lines offer long long term trades normally for multi years such as XAU/USD from Powell's interest rate drop in March 2020 when XAU/USD traded 1200's.

Import lines traveled higher from March 2020 at 118.0 to 140.00's to carry XAU/USD to current 2290.0. Powell offered XAU/USD  a free trade for 1000 points and 4 years.

The BLS terms Import and Export Price indices as the International Price Program. Monthly data dates to 1989 and 1982 to 1989 as quarterly releases. Next data is due April 12 and April 10 for the BOJ.

Import averages: : 139.77, 142.11, 139.93, 135.64, 133.60. Exports = 148.59, 153.12, 149.70, 143.07, 139.60. Current Imports trade 139.9 and 149.0 for Exports.

Overall, XAU/USD trades positive to Fed Funds at +29%, +63%, +65%, +58% and +27% at the 5 year average. XAU/USD trades negative to Inflation at -24%, -77%, -64%, -22% and +22% at the 5 year average.

From a market perspective, EUR/USD is the clear driver to XAU/USD at Correlation +23%, +81%, +8%, +2^ and +2%.

XAU/USD averages 1 to 5 years: 2001.51, 1901.79, 1874.94, 1861.52, 1783.26.

XAU/USD targets 2092.13, 2038.94 and 1998.05.

The 2 and 3 year monthly averages currently drive markets as this time frame applies to Imports, Exports, EUR/USD, XAU/USD, DXY, Inflation, Fed Funds.

Weekly

EUR/USD from monthly averages forms a bottom at 1.0626. For the week, EUR/USD big line is located at 1.0875 and we are short in the vicinity of 1.0875.

The EUR/USD universe trades overbought to EUR/JPY, EUR/CAD, EUR/AUD, EUR/NZD and fairly neutral to EUR/GBP and EUR/CHF.

USD/JPY and JPY cross pairs

The BOJ current account balances dropped like a rock since the change to interest rates. Bondholders are actually selling in small amounts while moving to short term T Bills. The 180 day average at -0.05 has yet to trade positive and is the last holdout to full positive interest rates across the board.

The BOJ activity since the change in rates is near its end and USD/JPY will again begin to move normally.

Targets: USD/JPY targets 150.55, EUR/JPY 163.37, GBP/JPY 190.50.

CAD/JPY trades fairly neutral and big break for lower is located at 110.62. CAD/CHF requires a break at 0.6583 and trades neutral alongside CAD/JPY. CAD/CHF and CAD/JPY are the same currencies.

NZD/USD is the preferred trade over AUD/USD as NZD contains a wider trade band than AUD. NZD/USD bottoms and long at 0.5981 and AUD/USD trades massive overbought.

Overall, currency markets remain in dead and slim ranges and DXY is the cause. DXY must get moving to allow markets to trade normal again.

GBP/USD big line is located at 1.2705. Any price above 1.2676 is open for shorts. The GBP universe trades neutral except for massive oversold GBP/AUD. Next levels for GBP/AUD 1.9246 and 1.9261 then 1.9275.

USD/CHF overbought at 0.9030. Back to dead for USD/CHF at 200 pips per month. Overbought USD/CAD targets the break at 1.3539 to trade 1.3512. CAD lacks trade ranges.

EUR/NZD next target 1.7949 and GBP/NZD 2.0933 and 2.0893.

Author

Brian Twomey

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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