EUR/USD. Normal levels this week as follows: 1.3766 ( Maximum), 1.3683, 1.3631, 1.3628, 1.3608 ( 100 day average), 1.3580, 1.3570's, 1.3462, 1.3320. Above: 1.3701, 1.3710, 1.3714, 1.3719, 1.3744. The level at 1.3683 appears as a statistic as well as 1.3680 coincides with US 0.3% Inflation so becomes vital on two fronts.
1.3462 and 1.3320 breaks lower must occur to change the price trend from aimless meandering to confident shorts with targets at 1.2900's and 1.2700's. Both lines are slowly rising to meet current prices, a showdown is on the way. Prices will either travel higher as the lines continue rising to target 1.4100's down the road or the break I advocated will occur. Prices failed to break the 1.3462 line 4 times within the last few months. I still advocate 1.3462 and 1.3320 will break and far lower prices will be seen. Why?
I ran not only European interest rates but 2 year US and German bond yields for my newsletter. The German 280 day average lies at 0.13, price closed below Friday. The distinct possibility and real is Europe may see negative deposit rates. They are ever so close. Price extremes are found at minus 0.10 and 0.38 and closer to current prices extremes lie between Minus 0.024 to 0.30. Negative deposit rates drops the Euro quickly. One disastrous news announcement and the Euro dives and negative deposit rates are seen.
The direction is down and shorts preferred as every rise in prices becomes more overbought. From current 1.3689, moving averages from 5 - 253 are a mess. From 1.3710, averages from 5- 253 become uniformly overbought and the distribution of prices hit critical levels not sustainable to hold or.close
Targets: From current 1.3689, the target is 1.3641, from 1.3710, the target becomes 1.3643. The target is rising and concerning and I don't see yet from current prices a giant Red candle to thrust prices lower. So far it appears the decline will be slow and gradual.
Brian Twomey, Inside the Currency Market, btwomey.com.