Brian Twomey
Brian's Investment
Emerging market currencies contain higher exchange rate numbers and far wider ranges than its 28 counterparts whose exchange rate numbers are lower against much smaller ranges. Other than this difference between exchange rates, no distinction exist between EM and 28 currency counterparts.
Best EM trades are found to capture the discrepancy between exchange rate ranges from the 28 counterparts. Currently, TRY, BRL and ZAR contain great opportunities from deeply overbought short, medium and long term. The problem is USD and EUR remain widely entangled with each currency and a break out is warranted yet still not seen.
In a past PLN trade article, addressed was USD/PLN and EUR/PLN contained no distinction as both exchange rates held a small distance. Both exchange rates traded together as one currency and both were either oversold or overbought. The last month's EUR/USD rise allowed a firm breakout between USD/PLN and EUR/PLN so now a true trade exists and a double trade as for example, long USD/PLN and short EUR/PLN.
The past month's EUR/USD rise however was far to small to force a break out to USD/TRY Vs EUR/TRY, USD/ZAR Vs EUR/ZAR and USD/BRL Vs EUR/BRL. And why is because EUR/USD ranges are far to small against wide ranges to TRY, BRL and ZAR.
For EUR/USD may move 2 and 400 pips but wide rangers TRY, ZAR and BRL may move 1000 pips and this wouldn't come close to forcing a breakout. More time is required before a possible breakout is seen and this assumes USD or EUR will move more widely. A range bound market to USD and EUR will only force TRY, ZAR and BRL ranges to hold much longer.
USD/BRL
Short 5.4452 just ahead of 5.4553 to target 5.3237. Must break 5.3642.
EUR/ZAR
Short 20.8159 to target 20.4004. must cross 20.5851. The target of this trade leaves EUR/ZAR in overbought territoty. The actual target and to have a fighting chance to breakout from USD/ZAR, then EUR/ZAR should trade to at least 20.2158.
USD/TRY
Short 7.3067 and 7.3199 to target 7.2276, must cross 7.2804. The target still leaves USD/TRY in deep overbought territory. USD/TRY should trade to easily 7.0654 and should attain this target easily.
AUD/BRL.
Short 4.0189 to target 3.8428. This target leaves AUD/BRL in deep overbought territoy as AUD/BRL should trade to easily 3.8100's. Longer term, AUD/BRL is overbought to richter scale levels short, medium and long term. AUD/BRL should contain a 2.000 handle.
USD/MYR
Long 4.1812 and 4.1779 to target 4.2109. Target leaves USD/MYR deeply oversold as USD/MYR should trade to easily 4.2300's.
USD/RON
Long 4.0955 and 4.0892 to target 4.1711. USD/RON contains easy potential to trade 4.1900 and 4.2000's.
USD/HUF
Long 292.13 and 291.72 to target 297.32. The target leaves USD/HUF in deep oversold as a better target is 301.00's.
Trading currencies and other financial instruments carries a degree of loss and possible loss of entire investments. Please managed your own risks, stop loss, and margins requirements.
Recommended Content
Editors’ Picks
AUD/USD stands firm above 0.6500 with markets bracing for Aussie PPI, US inflation
The Aussie Dollar begins Friday’s Asian session on the right foot against the Greenback after posting gains of 0.33% on Thursday. The AUD/USD advance was sponsored by a United States report showing the economy is growing below estimates while inflation picked up. The pair traded at 0.6518.
EUR/USD mired near 1.0730 after choppy Thursday market session
EUR/USD whipsawed somewhat on Thursday, and the pair is heading into Friday's early session near 1.0730 after a back-and-forth session and complicated US data that vexed rate cut hopes.
Gold soars as US economic woes and inflation fears grip investors
Gold prices advanced modestly during Thursday’s North American session, gaining more than 0.5% following the release of crucial economic data from the United States. GDP figures for the first quarter of 2024 missed estimates, increasing speculation that the US Fed could lower borrowing costs.
Ethereum could remain inside key range as Consensys sues SEC over ETH security status
Ethereum appears to have returned to its consolidating move on Thursday, canceling rally expectations. This comes after Consensys filed a lawsuit against the US SEC and insider sources informing Reuters of the unlikelihood of a spot ETH ETF approval in May.
Bank of Japan expected to keep interest rates on hold after landmark hike
The Bank of Japan is set to leave its short-term rate target unchanged in the range between 0% and 0.1% on Friday, following the conclusion of its two-day monetary policy review meeting for April. The BoJ will announce its decision on Friday at around 3:00 GMT.