FX Next Week: YCC, USD/CAD and 15 Currencies

USD/CAD’s long-term target was reported in January and updated in March at 1.3168, and 1.3033 traded today at 1.3150. USD/CAD formed a double bottom on today’s hourly chart at 1.3150. USD/CAD for January and February traded from 1.3200s to 1.3600’s then broke 1.3500s in March to trade at 1.3800s.

Since March at 1.3800 highs, USD/CAD spent three months trading to the 1.3168 targets. Yet overall, USD/CAD’s price path traded on the uneven side—the break of vital 1.3500’s delayed target completion much sooner than anticipated. The commonality to the target was 700 pips from 1.3800 highs or 300 X 2, and the same pip amount targets were reported for all trades from January to March.

From USD/CAD, next travels to hubris and arrogance. Once a target is identified, it's mathematically impossible not to trade with the target. The specialty is targets, known from 12 years and gazillions of past trades posted. 

No such concept as loss exists once a target is identified. Time may or may not remain on the right side. January to March trades all traded ideally, but USD/CAD decided to wait an additional three months. Never, ever doubt the target, as we can’t defeat mathematics.

USD/CAD averages radically changed over the past six months. On the bottom side are 1.2860 and 1.2613. On the topside, we have 1.3124, 1.3204, and 1.3395. Following targets below are 1.2999 and 1.2950. Above 1.3124 targets are: 1.3180, 1.3290, and 1.3298.

UPON TARGET COMPLETION, the USD/CAD price is now a settled and range price. A 700 pip trade no longer exists and may not materialize for the next 1 and 2 years. USD/CAD now shifts to profits from the seven and 24-hour and weekly trades.

YCC

The most vital to the YCC bands is 0.5 rather than minus 0.5. The BOJ must have laughed hysterically as they played the trading crowds like a fiddle. Every central bank on the planet contains its own personal YCC bands within the context of the yield curve. Most central bank bands are much smaller than the BOJ because the BOJ must address JPY/USD and seven numbers as current USD/JPY 141.89 Vs. JPY/USD 0.0070477.

The BOJ says we buy bonds between 0.5 to minus 0.5 or 1.5 and 100 basis points. This works for Monetary policy and to achieve and sustain the 2% Inflation target but contains zero and little effects for USD/JPY. The BOJ uses export and interest rate methods to address levels of USD/JPY but only when JPY/USD is affected.
The BOJ doesn’t give a lick to USD/JPY levels until JPY/USD becomes an Economic problem.

Credit to the BOJ as they see an early warning of economic problems ahead as they view exchange rate levels for USD/JPY and JPY/USD in 1000 and 2000 pip increments. All central banks traditionally pre 2016 viewed exchange rate levels in 1000 and 2000 pip increments but disbanded this practice upon the new post-2016 interest rate changes. The BOJ maintained the old practice in the long view, as did a few EM central banks, such as Norway, South Africa, Brazil, and Turkey.

The Week

DXY maintained a tiny range as forecasted Sunday due to many averages above 102.00’s and falling on the current DXY price. DXY remains in the same position for next week as 101.00’s become oversold, and 103.00s are blocked by many averages. DXY will eventually trade to 100.00’s and challenge the 50-year monthly average at 99.00’s.

Overbought GBP/USD held 1.2850 and traded to 1.2837 highs and lows to 1.2690. GBP/USD's big break for higher is now 1.2857, and overbought begins at a low of 1.2800’s and targets quickly 1.2712 and 1.2618. GBP/USD overall traded at 1.2501, 1.2618, 1.2857, and 1.3250.

EUR/USD target at 1.1037 traded to 1.1003. EUR/USD trades at 1.0818, 1.0935, and 1.1117. EUR/USD trades massive overbought, and 1.0935 becomes the vital level for shorts next week.

GBP/CHF trades a 372 pip range from 1.1324 to 1.1696. Currently, GBP/CHF trades overbought from 1.1443 and consistent with overbought GBP/USD.

EUR/CHF trades 0.9801 to 1.0136 and is currently on the verge of a break at 0.9801. Oversold next week begins at 0.9759, on a break at 0.9801, and an excellent long trade for next week.

AUD/USD trades 0.6742 to 0.6919. AUD/USD threatens a break at 0.6742 to trade back to 0.6600s as low 0.6800s becomes overbought.

NZD/USD trades 0.6192 to 0.6404. Break at 0.6192 targets middle 0.6100s and long again to middle 0.6200’s.

USD/JPY lows traded to `141.20 and target at 140.03. Next week targets 140.77, then 140.14.

DXY small ranges are holding up progress yet again for currency prices to trade on a pip-for-pip basis. Currency markets are trading the percentage basis trades—same story for next week.

EUR/AUD shorts for next week as EUR/AUD is now held higher by 1.6049. GBP/AUD shorts following week's targets again at 1.8600’s as GBP/AUD is also held at 1.8544 to travel lower.

GBP/NZD no changes to 1.0670 and targets at 2.0300s, 2.0200, and 2.0100. Lows this week achieved 2.0527 and targets 2.0300’s for next week. GBP/NZD is preferred over EUR/NZD as the better trade.

GBP/CAD and EUR/CAD trade not only mid-range but highly divergent to each other. Higher GBP/CAD at 1.6900’s then short and compliance to overbought GBP/USD and GBP/CHF.

Volatility definition. It is measured by pips and ranges.