The currency market: EUR/USD V DXY

Brian Twomey Brian's Investment

EUR/USD broke higher above its 5 year average at 1.1282 and traded to 1.1900's.

DXY broke below its 5 year average at 96.39 and traded lower to 92.00's.

EUR/USD 10 year average is located at 1.2180 while DXY 10 year average is located at 89.22. EUR/USD at 1.1800's is within 300 pips of its 10 year average while DXY at 92.00's is within 300 pips to its 10 year average.

DXY break of its 10 year average then tough supports exist at 88.39 and 87.98. EUR/USD Break of its 10 year average then next comes 1.2250, 1.2321 and 1.2462 and just ahead of the mid point at 1.2745.

EUR/USD currently trades between 1.1282 and 1.2180 while DXY trades between 89.22 and 96.39 at its 5 year average. The EUR/USD mid point is located at 1.1731 and dropping by 4 pips each week while DXY mid point is located at 92.80.

DXY currently trades between 93.52 and next low average at 91.98 or from 93.52 to 95.70. For DXY 93.52 is its most vital average to determine lower of higher. below 91.98 then next comes 90.56, 89.22 and 88.39.

The lower DXY trades then volatility picks up steam while the higher EUR/USD trades then the higher is volatility and its a factor of both DXY and EUR/USD ranges. EUR/USD currently ranges right at 428 pips while DXY ranges at 279 pips. EUR/USD and DXY don't trade a 1 for 1 pip move.

EUR/USD is overbought from 1.1282 while DXY is oversold from 96.39. EUR/USD is more overbought than DXY is oversold but again a factor to ranges.

Good lower targets for EUR/USD are located at 1.1628 and 1.1557 while good targets for DXY is located right at 95.70. A break higher at 95.70 targets the 5 year average at 96.39.

Determination time is here as EUR/USD breaks its 10 year average at 1.2180 and travels higher or it fails and trades back to its 5 year average at 1.1282. Or DXY breaks its 10 year average and trades lower to 88.00 or its fails and trades back to its 5 year average at 96.39.

The entire G28 pair currency market and 40 + most significant EM currencies are waiting for the resolution. If 10 year average breaks occur then a new trend begins and a failure means significant moves back to 5 year averages.

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.

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