The common theme for currency prices over the past 6 years are two points. The first intonation occurred about 52 months ago, February 2010 for all pairs and the second inflection point occurred 18 months ago, December 2012. Points mean not only significant breaks occurred but relationships changed between USD and non USD pairs to its cross pair counterparts. "About 52 months ago" means most pairs I viewed, 35 to be exact, saw significant breaks while a few pairs were in catch up phase but were firmly on the way to their breaks.
For the EUR 52 months ago, the break at 1.3000, 1.3300 allowed the EURO to travel to its 1.1881 lows. The import is both point breaks above were responsible for the recent move to 1.3980's and is again now vital to the break below to see EUR/USD prices travel further down. The actual levels today are 1.3491 and 1.3335.
GBP/USD. The break above at 1.5463 was vital for continued gains but the level at 1.5980 -1.6000 sealed GBP/USD's fate that offered massive support and allowed GBP to continue its trend. The level at 1.6000 is still vital today as a significant point but GBP/USD now finds itself stuck between 1.6677 - 1.7143 range.
Significant changes occurred among cross pairs. The Japanese own all cross pairs except for a shared relationship between AUD/JPY and NZD/JPY and the reason for that shared relationship is AUD and NZD pairs were erroneously hit hard when the crisis occurred. Both weren't responsible but both suffered the effects. The aftermath is AUD and NZD still own their cross pairs and that includes NZD/CAD, AUD/CAD, NZD/CHF, AUD/CHF, AUD/CAD will see significant changes in the months and years ahead because it must lose its AUD connection and that is occurring as I write. Any wonder the recent statements by the BOJ that they were happy with USD/JPY present levels.
Some cross pairs were hit so hard, they lost control and connections to counterpart pairs: EUR/NZD, EUR/AUD, GBP/NZD, GBP/AUD. All are now not just vastly oversold but they are years oversold, EUR/NZD is by far the most oversold pair among my 35 pairs I viewed. Next comes GBP/AUD followed by GBP/NZD and EUR/AUD.
EUR/GBP and AUD/NZD are two more "floater pairs" that holds no relationship nor any explanation to its price movements. Some pairs move in sympathy "just because" and that fits EUR/GBP and AUD/NZD. A long time friend with 41 straight years in this business tells me both hold value in pricing as export and imports.
USD/ZAR and CAD/ZAR still retain its Risk off, Rsk on determination because that relationship is solid.
The import to the cross pair scenario is cross pairs since the crisis retains a massive massive Risk off posture. Anybody now questions the SNB's next possible move due to the ECB's rate decrease is not following CHF pairs. The SNB are quite happy with their cross pairs since they own them therefore USD/CHF prices and tight ranges over the last few years are quite satisfying to the SNB.
No mention of CAD? CAD is a lost soul in this mix and we may very well see USD/CAD far far higher. Its a pure ugly situation for CAD no matter how its viewed.
If JPY cross pairs are heading far higher as I so far believe and EUR/NZD, GBP/NZD, EUR/AUD, GBP/AUD also head higher then our world is still heading towards Risk off prices for a long time in the future.
Brian Twomey, Inside the Currency Market, btwomey.com