TRENDING:

Trade War

XAU/USD

Weekly trades: EUR/USD, EUR/GBP, NZD/USD

Brian Twomey Brian's Investment

EUR/USD is driven by two factors. The first is the traditional 9 year currency cycle bottom achieved in 2017 at 1.0300's from its cycle high in 2008 at 1.6000's.

Second factor is the falling line at current 1.1179. In the week of January 4, the line was located at 1.1280. In the week of June 6, 2019, the line was 1.1394. Weekly, the line moves slowly yet moves slowly downward.

The competition to 1.1179 is the 5 year average at current 1.1278. In 2008, the 5 year average was located at 1.3200's. The formal break of 1.3200's in 2012 was not only the mid point of the 9 year currency cycle to price and time but allowed EUR/USD to continue its travels to the 1.0300's cycle bottom.

EUR/USD remains trapped between 1.0300's and 1.1179 and the 5 year average at 1.1278, a rough mid point at about 1.0748. EUR/USD currently trades above its mid point at 1.0800's.

Non USD currency pair commonality is all trade below 5 year averages while all USD currency pairs trade above. This includes all EM currencies. Also includes DXY as it trades at overbought from 100.36 and trades above its 5 year average at 96.45.

DXY or USD currency pairs lack any chance to break 5 year averages anytime soon nor will non USD currency pairs such as EUR/USD and GBP/USD break its 5 year averages.

Until a break is seen to 5 year averages, the vast majority of currency pairs are contained in about 300 pip ranges for USD and Non USD currency pairs.

JPY cross pairs are contained within 200 to 300 pip ranges. Higher range pairs such as GBP/AUD, EUR/AUD, EUR/NZD and GBP/NZD contain about 300 to 500 pip ranges. Wide range EM currency pairs to include RON, PLN, HUF and BRL ranges are at about 5 to 800 pips.

How 5 year averages translates to currency pairs and prices is the higher prices travel to 5 year averages then the higher expands the ranges. The more distant to trade away from 5 year averages then the more ranges compress. The more compression is seen from ranges warns to not only higher prices but subject to violent upswings. Above describes EUR/USD and all non USD currency pairs.

The reverse is true for USD currency pairs. The more prices travel lower to 5 year averages then expands the ranges.

Its May and the traditional time for EUR/USD to begin its seasonal 6 month upswing until it tops in December and January. Then falls from January to May. Always a EUR/USD price caution to traditional European Parliament budgets passed in November.

EUR/USD seasonal effects are assessed by my friend Peter Wadkins, formerly 15 years at Thomson Rueters and 47 year FX veteran. The Peter Wadkins Upswing Indicator works like this and perfectly over the past 15 years for EUR/USD and its past currency, USD/DEM.

Whenever Peter takes traditional June vacations, the EUR/USD travels higher and remains higher throughout the summer. To truly understand the depth to the Peter Wadkins Upswing Indicator, USD/DEM rose upon June vacations every year in the pre EUR/USD days.

On the interest rate front, USD interest rates last week failed to move all week. Literally, failed to move and an event not ever seen. If USD interest rates fail to move then every nation's interest rates fail to move. Did we truly believe USD could ever trade negative. Its impossible because every nation's interest rates would trade lower or to negative because every nation prices interest rates from USD.

Weekly Trades

This week's trades are EUR/USD to again trade continuously throughout the week and maximize profit pips. NZD/USD is included for no particular reason but it contains good potential for continuous trades. EUR/GBP, a most horrible, horrible currency pair is at richter scale 0.8900's and represents a decent trade.

EUR/USD

Long 1.0790 and 1.0771 to target 1.0884. Must cross 1.0827, 1.0845 and 1.0866.

Long above 1.0902 to target 1.1012. Must cross 1.1009.

Short below 1.0902 to target 1.0836. Must cross 1.0866 and 1.0845.

EUR/GBP

Short 0.8942 and 0.8958 to target 0.8774. Must cross and watch 0.8808.

NZD/USD

Long 0.5905 and 0.5892 to target 0.6099. Must cross 0.6005, 0.6030, 0.6055 and 0.6080.

Long above 0.6130 to target 0.6223. Must cross 0.6155, 0.6180 and 0.6205.

Short 0.6223to target 0.6160.

Cautious short 0.6099 to target 0.6020. Must cross 0.6080, 0.6055 and 0.6030.

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.

EUR/USD weakens as US jobs data trims Fed rate cut bets

The EUR/USD pair trades in negative territory for the third consecutive day near 1.1860 during the early European session on Thursday. Traders will keep an eye on the US weekly Initial Jobless Claims data. On Friday, the attention will shift to the US Consumer Price Index inflation report.

GBP/USD bullish outlook prevails above 1.3600, UK GDP data looms

The GBP/USD pair gains ground near 1.3635, snapping the two-day losing streak during the early European session on Thursday. The preliminary reading of UK Gross Domestic Product for the fourth quarter will be closely watched later on Thursday. The UK economy is estimated to grow 0.2% QoQ in Q4, versus 0.1% in Q1.

Gold remains on the defensive below two-week top; lacks bearish conviction amid mixed cues

Gold sticks to modest intraday losses through the Asian session on Thursday, though it lacks follow-through selling and remains close to a nearly two-week high, touched the previous day. The commodity currently trades above the $5,070 level, down just over 0.20% for the day, amid mixed cues.

UK GDP set to post weak growth as markets rise bets on March rate cut

Markets will be watching closely on Thursday, when the United Kingdom’s Office for National Statistics will release the advance estimate of Q4 Gross Domestic Product. If the data land in line with consensus, the UK economy would have continued to grow at an annualised pace of 1.2%, compared with 1.3% recorded the previous year.

The market trades the path not the past

The payroll number did not just beat. It reset the tone. 130,000 vs. 65,000 expected, with a 35,000 whisper. 79 of 80 economists leaning the wrong way. Unemployment and underemployment are edging lower. For all the statistical fog around birth-death adjustments and seasonal quirks, the core message was unmistakable. The labour market is not cracking.

Sonic Labs’ vertical integration fuels recovery in S token

Sonic, previously Fantom (FTM), is extending its recovery trade at $0.048 at the time of writing, after rebounding by over 12% the previous day. The recovery thesis’ strengths lie in the optimism surrounding Sonic Labs’ Wednesday announcement to shift to a vertically integrated model, aimed at boosting S token utility.