A currency war has begun….


Spot Gold

The Federal Reserve, Bank of England, European Central Bank and Bank of Japan all expanded their balance sheets (commonly referred to as quantitative easing or QE for short) post-2008 to counteract a contracting money supply and prevent a deflationary spiral. These actions also have the beneficial effect of weakening the currency and improving international competitiveness.

China was considered immune because of its persistent current account surplus and $4 Trillion in foreign reserves. But the recent sharp contraction in Chinese exports to the EU suggest otherwise.

The People’s Bank of China (PBOC) responded by effectively devaluing the Yuan. So far the “one-off adjustment” has been repeated on three consecutive days.

USDCNY

The Euro appreciated considerably against the US dollar as CNY carry trades are unwound.

EURUSD

Gold broke out of its narrow rectangle between $1080 and $1100 per ounce as investors scuttled to the safety of bullion.

Spot Gold

* Target calculation: 1100 – ( 1200 – 1100 ) = 1000

The Yen displays little net gain or loss.

USDJPY

The Dollar Index does not include China’s Yuan and is falling primarily because of the Euro. The Broad Trade-Weighted Index which includes the Yuan is calculated weekly; so it will take a few days before we can assess the impact.

Dollar Index

Competing devaluations are likely to continue as each state (or trading block) attempts to maintain an export surplus. This is a zero sum game, so each action will inevitably elicit an equivalent response from major trading partners. Currency markets are awash with vast sums of liquid capital and an estimated $9 Trillion in carry trades (where hedge funds borrow in a low-interest-rate currency and invest in another at higher rates). Any beggar-thy-neighbor escalation is likely to destabilize financial markets and the precarious balance may prove difficult to restore.

During the 1997 Asian Financial Crisis George Soros called for international regulation of financial markets to prevent a reoccurrence.

It is time to recognize that financial markets are inherently unstable. Imposing market discipline means imposing instability, and how much instability can society take? …. To put it bluntly, the choice confronting us is whether we will regulate global financial markets internationally or leave it to each individual state to protect its interests as best it can. The latter course will surely lead to the breakdown of the gigantic circulatory system, which goes under the name of global capitalism.

~ George Soros: The Crisis of Global Capitalism (1998)


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Asia: Governor Kuroda bets on QE

Aggressive asset purchases by the Bank of Japan shows Governor Kuroda’s willingness to back his QE policy to the hilt. The Yen has weakened significantly against the Dollar over the last two years and this trend is likely to continue.

USDJPY

The Nikkei 225 surged through 16300, signaling a fresh advance. The long-term target is 18000*. Reversal below 16000 is unlikely, but would warn of another correction. Recovery of 13-week Twiggs Money Flow above zero indicates medium-term buying pressure.

Nikkei 225

* Target calculation: 16000 + ( 16000 – 14000 ) = 18000

Hong Kong’s Hang Seng Index is testing resistance at 24000. Reversal below 23000 would warn of a primary down-trend. Breach of 21200 would confirm. Reversal of 13-week Twiggs Money Flow below zero would strengthen the bear signal. Follow-through above 25000 is unlikely, but would signal another primary advance.

Hang Seng Index

China’s Shanghai Composite Index respected support at 2250, strengthening the bull signal. Follow-through above 2450 would confirm a primary up-trend. 13-Week Twiggs Money Flow remains in an up-trend, signaling medium-term buying pressure. Reversal below 2250 is unlikely, but would warn of trend weakness.

Shanghai Composite Index

* Target calculation: 2250 + ( 2250 – 2000 ) = 2500

India’s Sensex continues in a primary up-trend, testing resistance at 28000. Troughs above zero on 13-week Twiggs Money Flow indicate buying pressure. Short retracements rather than stronger corrections also suggest buying pressure. Breakout above 28000 would indicate an advance to 29000. The index is becoming over-extended, but may remain so for some time. Reversal below 27000 and the secondary trendline is less likely, but would indicate a correction to the primary trendline around 25000.

Sensex

* Target calculation: 27000 + ( 27000 – 26000 ) = 28000

Nikkei finds Yen support

The US Dollar found solid support at ¥101 against the Yen. Recovery above ¥103 would suggest an advance to ¥111*. Breakout above ¥106 would confirm. Recovery above the December 2013 high on 13-week Twiggs Momentum would strengthen the signal. Breach of support at ¥101 is unlikely, but would warn of a correction to primary support at ¥96.

Nikkei 225

* Target calculation: 106 + ( 106 – 101 ) = 111

The Nikkei 225 found support at 14000. Recovery above 15000 would indicate another attempt at 16000. Completion of a 13-week Twiggs Money Flow trough above zero would strengthen the signal.

Nikkei 225

* Target calculation: 16000 + ( 16000 – 14000 ) = 18000

Japan: Dollar supports Nikkei

The US Dollar found support at ¥101 against the Yen. Recovery above the May high at ¥104 would suggest a healthy up-trend, while breakout above ¥106 would offer a target of ¥110*. Divergence on 13-week Twiggs Momentum remains bearish, but another trough above zero would reverse this. Breach of support at ¥101 now seems unlikely, but would warn of trend weakness.

Nikkei 225

* Target calculation: 106 + ( 106 – 102 ) = 110

A rising Dollar/Yen exchange rate would assist Japanese stocks. The Nikkei 225 found support at 14000 on the monthly chart. Recovery above 15000 would suggest another advance, while breakout above 16000 would confirm. Reversal of 13-week Twiggs Money Flow below zero, however, would warn of a primary down-trend.

Nikkei 225

Forex: Dollar and Sterling strengthen

The Euro is rallying for another test of resistance at $1.37 after finding support at $1.3350 against the greenback. Troughs above zero on 13-week Twiggs Momentum suggest a healthy up-trend. Breakout above $1.37 would signal an advance to $1.40*. Respect of resistance, indicated by reversal below the secondary rising trendline, would, however, warn of a correction to the primary trendline at $1.31.

Euro/USD

* Target calculation: 1.37 + ( 1.37 – 1.34 ) = 1.40

Sterling breakout above resistance at €1.20 signals a primary up-trend. Recovery of 13-week Twiggs Momentum above zero strengthens the signal. Target for the advance is €1.23*. Reversal below €1.19 is unlikely, but would warn of another test of €1.1650.

Sterling/Euro

* Target calculation: 1.20 + ( 1.20 – 1.17 ) = 1.23

The Greenback is likely to retrace to test the new support level at ¥101 Japanese Yen. Respect would confirm an advance with a target of ¥108*. The trough above zero on 13-week Twiggs Momentum strengthens the signal. Reversal below ¥101 is unlikely, penetration of the rising trendline warning of trend weakness.

USD/JPY

* Target calculation: 1.01 + ( 1.01 – 0.94 ) = 1.08

Canada’s Loonie broke primary support at $0.94, signaling another decline with a target of $0.915*. A peak below zero on 13-week Twiggs Momentum strengthens the signal. Recovery above $0.945 is unlikely, but would warn of a bear trap.

Canadian Loonie

* Target calculation: 0.945 – ( 0.975 – 0.945 ) = 0.915

The Aussie Dollar is heading for a test of primary support at $0.89. The peak below zero on 13-week Twiggs Momentum signals continuation of the down-trend. Breakout below $0.89 would offer a long-term target of $0.81*, while respect of support would suggest a rally to $0.93. The RBA needs a weaker Aussie Dollar, without lowering interest rates, and will do all it can to assist the decline.

Aussie Dollar

* Target calculation: 0.89 – ( 0.97 – 0.89 ) = 0.81

Forex: Euro and Aussie retreat

The Euro retreated after a false break above resistance at $1.34, suggesting a test of $1.32. Downward breakout would signal a test of primary support at $1.28, while recovery above $1.34 would indicate a primary advance to $1.40*. Momentum predominantly above zero favors an up-trend.

Euro/USD

* Target calculation: 1.34 + ( 1.34 – 1.28 ) = 1.40

The greenback is testing the upper border of its downward channel against the Yen. Breakout above ¥98.50 would suggest the correction is over and another test of ¥101.50 likely. Respect of resistance, however, would indicate a test of primary support at ¥94; breach of support at ¥96 would confirm.

USD/JPY

* Target calculation: 102 + ( 102 – 96 ) = 108; 94 – ( 102 – 94 ) = 86;

The Aussie Dollar retreated below $0.90 against the greenback, respect of the descending trendline suggesting another down-swing. Breach of support at $0.8850* would offer a medium-term target of  $0.86*, but the long-term target remains at $0.80*.

Aussie Dollar

* Target calculations: 0.89 – ( 0.92 – 0.89 ) = 0.86; 0.95 – ( 1.10 – 0.95 ) = 0.80

Forex: Euro, Aussie and Loonie strengthen

The Euro is consolidating between $1.32 and $1.34. Upward breakout would indicate a primary advance to $1.40*, while reversal below $1.32 would warn of another test of primary support at $1.27. Close oscillation of 13-week Twiggs Momentum around the zero line indicates hesitancy.

Euro/USD

* Target calculation: 1.34 + ( 1.34 – 1.28 ) = 1.40

Sterling respected primary support at €1.135/€1.140 against the euro. Recovery above €1.165 suggests that a bottom is forming.  Penetration of the descending trendline would strengthen the signal. In the longer term, breakout above €1.19 would complete a double bottom with a target of €1.24. Recovery of 13-week Twiggs Momentum above zero would also indicate a primary up-trend. Reversal below €1.165, however, would warn the down-trend is likely to continue. Failure of primary support at €1.14 would confirm.

Sterling/Euro

* Target calculation: 1.19 + ( 1.19 – 1.14 ) = 1.24

The greenback is headed for a test of primary support at ¥94 against the Yen.  Breach of short-term support at ¥96 would confirm.  In the longer term, breach of primary support at ¥94 would signal a down-trend with an initial target of ¥86*, while recovery above ¥101.50 would indicate an advance to ¥108*.

USD/JPY

* Target calculation: 102 + ( 102 – 96 ) = 108; 94 – ( 102 – 94 ) = 86;

Canada’s Loonie is consolidating between $0.96 and $0.975 against the greenback. Upward breakout would penetrate the descending trendline, suggesting that a bottom is forming, while reversal below $0.96 would test primary support at $0.945.

Canadian Loonie

Short retracement of the Aussie Dollar against the greenback suggests buying pressure. Follow-through above $0.92 would test the descending trendline and resistance at $0.93. Breakout is unlikely, but would warn that the down-trend is ending. Reversal below medium-term support at $0.90 would warn of a decline to $0.87*, with a long-term target of $0.80*.

Aussie Dollar

* Target calculations: 0.90 – ( 0.93 – 0.90 ) = 0.87; 0.95 – ( 1.10 – 0.95 ) = 0.80

Forex: Euro rallies, Yen weakens, Aussie consolidates

The Euro continues to test medium-term resistance at $1.32 on the weekly chart. Breakout above $1.32 would suggest a primary advance, with a target of $1.40* — confirmed if resistance at $1.34 is broken. But oscillation of 63-day Twiggs Momentum around zero does not indicate a strong trend and respect of resistance remains as likely.

Euro/USD

* Target calculation: 1.34 + ( 1.34 – 1.28 ) = 1.40

The greenback recovered above long-term support at ¥100 against the Yen, indicating continuation of the advance, with a target of ¥114*. Follow-through above ¥101.50 would confirm. Reversal below ¥100 is unlikely, but would warn of a test primary support at ¥94; confirmed if support at ¥98.50 is broken.

USD/JPY

* Target calculation: 104 + ( 104 – 94 ) = 114

Canada’s Loonie broke resistance at $0.96, suggesting a rally to the descending trendline and resistance at $0.98 against the greenback. Reversal below $0.96, however, would warn of another test of support at $0.9450. 63-Day Twiggs Momentum declining while below zero reflects a healthy primary down-trend.

Canadian Loonie

The Aussie Dollar is consolidating below medium-term resistance at $0.93 against the greenback. Breakout would signal a rally to the primary trendline at $0.96. But the primary trend remains downward and respect of $0.93 would re-test $0.90. The long-term target remains at $0.80* against the greenback. The RBA favors a softer dollar to cushion the impact of falling commodity prices.

Aussie Dollar

* Target calculation: 0.95 – ( 1.10 – 0.95 ) = 0.80

The impact of the declining resources sector is reflected in the primary down-trend on the Aussie/New Zealand Dollar cross. AUDNZD is approaching its target of $1.15 and breakout above the descending trendline would indicate a rally to test resistance at $1.21. But respect of $1.21 would be likely, suggesting another downward leg on the Aussie/Kiwi cross.

Aussie Dollar

* Target calculation: 1.21 – ( 1.27 – 1.21 ) = 1.15

Forex: Euro hesitant while Aussie falls

The euro is testing support at $1.30, representing a two-thirds retracement of the previous advance. Follow-through below $1.2950 would signal another test of primary support at $1.28 — and a ranging market — while respect of $1.30 would suggest a primary advance to $1.36*. Recovery of 63-day Twiggs Momentum above zero would be a bullish sign.

Euro/USD

* Target calculation: 1.30 + ( 1.34 – 1.28 ) = 1.36

Pound Sterling is ranging between €1.16 and €1.19 against the euro. Upward breakout — and penetration of the descending trendline — would signal a primary advance to €1.22*. But breach of support at €1.16 would indicate another test of primary support at €1.14, while a 13-week Twiggs Momentum peak below zero would suggest continuation of the primary down-trend.
Pound Sterling

The greenback retraced to test the new support level at ¥100 against the Yen. Respect, indicated by follow-through above ¥101, would re-test resistance at ¥103 to ¥104. But reversal below ¥99 seems as likely, and would re-test primary support at ¥94.

USD/JPY

* Target calculation: 104 + ( 104 – 94 ) = 114

Canada’s Loonie is testing support at $0.95 against the greenback. Follow-through below $0.9450 is likely and would signal another decline, with a target of $0.9350*. 63-Day Twiggs Momentum oscillating below zero indicates a strong primary down-trend.

Canadian Loonie

* Target calculation: 0.96 – ( 0.9850 – 0.96 ) = 0.9350

The Aussie Dollar continues to fall, with an immediate target of $0.90* and a long-term target of $0.80* against the greenback. The RBA is cheering this on as they need a softer dollar to cushion the impact of a down-turn in commodity prices.

Aussie Dollar

* Target calculation: 0.92 – ( 0.94 – 0.92 ) = 0.90; 0.95 – ( 1.10 – 0.95 ) = 0.80

Forex: Euro falters while Aussie fall continues

The euro fell through support at $1.32 and is headed for a test of primary support at $1.27*. Failure of support would complete a broad head and shoulders reversal, offering a target of $1.17*. Descending 13-week Twiggs Momentum suggests a primary down-trend.

Euro/USD

* Target calculation: 1.27 – ( 1.37 – 1.27 ) = 1.17

Pound Sterling is headed for a test of support at $1.50 against the greenback. A 13-week Twiggs Momentum peak below zero suggests a primary down-trend. Failure of support at $1.50 would confirm.
Pound Sterling

The greenback is headed for a test of ¥100 against the Yen, after finding support at ¥94. The primary trend is upward and recovery above ¥100 would signal a fresh advance with a target of ¥114*. A 13-week Twiggs Momentum trough above zero would strengthen the signal. Respect of resistance at ¥100, however, would warn of reversal.

USD/JPY

* Target calculation: 104 + ( 104 – 94 ) = 114

Canada’s Loonie found support at $0.95 against the greenback, not $0.96 as expected. Recovery above $0.96 would suggest a rally to test the descending trendline around $0.98*.

Canadian Loonie

* Target calculation: 0.97 – ( 1.00 – 0.97 ) = 0.94

The Aussie Dollar displays a small flag as it rallies to test resistance at $0.94 against the greenback. Respect of resistance is likely and would suggest a decline to $0.90*.

Aussie Dollar

* Target calculation: 0.92 – ( 0.94 – 0.92 ) = 0.90

Forex: Euro retraces but Sterling weakens on the cross

The euro is retracing to test the new support level at $1.32, respect would confirm the advance to $1.37*.

Euro/USD

* Target calculation: 1.32 + ( 1.32 – 1.27 ) = 1.37

Pound Sterling is testing support at €1.16 against the euro. Failure would indicate a decline to primary support at  €1.14 , with a longer term target of €1.10. A 13-week Twiggs Momentum peak below zero would strengthen the bear signal.
Pound Sterling

The greenback found support at ¥94 against the Yen. The primary trend is still upward and recovery above ¥100 would signal a fresh advance with a target of ¥114*. A 13-week Twiggs Momentum trough above zero would strengthen the signal. Respect of resistance at ¥100, however, would warn of reversal.

USD/JPY

* Target calculation: 104 + ( 104 – 94 ) = 114

Canada’s Loonie respected resistance at $0.99 against the greenback and is headed for another test of support at $0.96. Successive peaks below zero on 13-week Twiggs Momentum indicate a healthy primary down-trend. Breach of  $0.96 would offer a target of $0.93*.

Canadian Loonie

* Target calculation: 0.96 – ( 0.99 – 0.96 ) = 0.93

Forex: Aussie resistance, Yen falls

The Aussie Dollar rallied to $0.955 on the 2-hour chart before encountering selling pressure. Expect a test of the 2011 low at $0.94. Breach would indicate another decline. The next target is $0.90*, with a long-term target of $0.80*. Breakout above $0.955 is unlikely, but would re-test resistance at $0.98.

Aussie Dollar/USD

* Target calculations: 0.94 – ( 0.98 – 0.94 ) = 0.90 and 0.95 – ( 1.10 – 0.95 ) = 0.80

Canada’s Loonie, however, respected support at $0.96, heading for another test of resistance at $0.99 or parity. 13-Week Twiggs Momentum below zero suggests continuation of the down-trend. Respect of resistance would indicate another decline, with a target of $0.94*.

Canadian Loonie

* Target calculation: 0.97 – ( 1.00 – 0.97 ) = 0.94

The euro broke resistance at $1.32 and is headed for $1.37*. Breakout is some way off, but would offer a target of $1.47*.

Euro/USD

* Target calculation: 1.37 + ( 1.37 – 1.27 ) = 1.47

Pound Sterling broke resistance at $1.56, signaling an advance to $1.63*. Recovery of 13-week Twiggs Momentum above zero would strengthen the bull signal.
Pound Sterling

* Target calculation: 1.56 + ( 1.56 – 1.50 ) = 1.62

The greenback continues a strong correction against the Yen, but this is a secondary movement and the primary up-trend is unaltered. A 13-week Twiggs Momentum trough above zero would strengthen the signal. Recovery above resistance at ¥100 would signal a fresh advance with a target of ¥113*. Long-term target for the advance is the 2007 high at ¥125*.

USD/JPY

* Target calculations: (a) 104 + ( 104 – 95 ) = 113; (b) 100 + ( 100 – 75 ) = 125

Forex: Aussie falls but Euro and Yen unfazed

After a weak rally to $0.98, the Aussie Dollar broke primary support at $0.96, signaling a strong down-trend. Long-term target for the decline is $0.80*.

Aussie Dollar/USD

* Target calculation: 0.95 – ( 1.10 – 0.95 ) = 0.80

Canada’s Loonie is also likely to break support at $0.96, offering a long-term target of $0.82*.

Canadian Loonie

* Target calculation: 0.94 – ( 1.06 – 0.94 ) = 0.82

The euro, however, broke resistance at $1.30 and is headed for a test of $1.32. Breach of that level would offer a target of $1.36*. But respect of $1.32 would warn of a head and shoulders reversal — completed if support at $1.27 is broken.

Euro/USD

* Target calculation: 1.32 + ( 1.32 – 1.28 ) = 1.36

The greenback reversed sharply against the Yen in the last week, falling from ¥104 to ¥99. But the scale of the reversal is placed in its proper perspective on a monthly chart. The primary up-trend is unfazed, and recovery above resistance at ¥100 would signal a fresh advance with a target of ¥110*. The 30-year secular bear trend is over. Long-term target for the advance is the 2007 high at ¥125*.

USD/JPY

* Target calculations: (a) 104 + ( 104 – 99 ) = 109; (b) 100 + ( 100 – 75 ) = 125

Forex: Aussie, Yen and Euro find support

The Aussie Dollar broke support at $0.96 against the greenback before retracing, the long tail indicating buying pressure. Expect a weak bear rally to test resistance at parity before another decline breaches primary support, offering a target of $0.90*.

Aussie Dollar/USD

* Target calculation: 0.96 – ( 1.02 – 0.96 ) = 0.90

The euro has so far respected primary support at $1.27. Breakout above resistance at $1.30 would suggest a primary up-trend; confirmed if the euro follows through above $1.32. Breach of support is unlikely, but would offer a target of $1.20/$1.22*.

Euro/USD

* Target calculation: 1.27 – ( 1.32 – 1.27 ) = 1.22

The greenback retreated sharply against the yen as Japanese investors repatriate offshore bond and stock investments — see Mrs Watanabe Brings Home the Bacon. But the longer term trend is unchanged. Respect of support at ¥100 would signal a fresh primary advance. Breach of the long-term declining trendline indicates the 30-year secular bear trend is over. Long-term target for the advance is the 2007 high at ¥125*.

USD/JPY

* Target calculation: 100 – ( 100 – 75 ) = 125

Forex: Aussie breaks support while Yen soars

The Aussie Dollar broke primary support at $1.015 and is testing parity against the greenback. Parity is not expected to hold and we are likely to see a test of the next major support level at $0.95/$0.96. Narrow fluctuation of 63-day Twiggs Momentum around zero continues to suggest a ranging market.

Aussie Dollar/USD

The euro is retreating, headed for another test of $1.2750. Respect would signal another attempt at $1.37, while failure would indicate a primary down-trend — testing long-term support at $1.20. The failed advance to $1.50 would be bearish; and breach of $1.20 would offer a target of $1.05*.

Euro/USD

* Target calculation: 1.20 – ( 1.35 – 1.20 ) = 1.05

Rapid expansion of the monetary base by the Bank of Japan is fueling inflation fears and weakening the yen. Lars Christensen points out that, with competitive devaluation from all quarters, exports are not likely to play a major part in a Japanese recovery. What is more likely is a consumption and investment boom as households invest in real assets as a hedge against inflation.

The greenback broke resistance at ¥100 against the Japanese Yen — a one-third appreciation from the lows of 2011/2012. Expect retracement to test the new support level, but breach of the long-term declining trendline indicates the 30-year secular bear trend is over. Long-term target for the advance is the 2007 high at ¥125*.

USD/JPY

* Target calculation: 100 – ( 100 – 75 ) = 125

Forex: Aussie consolidates while Sterling surprises

The euro is consolidating between $1.30 and $1.32. Upward breakout is more likely and would test the high of $1.37. Reversal below $1.30 would warn of another decline, to around $1.24*. In the long-term, breakout above $1.37 would signal a primary advance to $1.50. A 13-week Twiggs Momentum trough at the zero line would reinforce this.

Euro/USD

* Target calculation: 1.28 – ( 1.32 – 1.28 ) = 1.24

Pound sterling surprised with a reversal above resistance at $1.53. Follow-through above $1.54 would suggest an advance to around $1.58, while retreat below $1.52 would signal a down-swing to $1.43*. Declining 13-week Twiggs Momentum, below its 2011 lows, strengthens the bear signal.

Sterling/USD

* Target calculation: 1.53 – ( 1.63 – 1.53 ) = 1.43

The Aussie Dollar rallied off primary support at $1.015. Narrow fluctuation of 63-day Twiggs Momentum around zero suggests a ranging market. Respect of support suggests another test of $1.06.

Aussie Dollar/USD

Canada’s Loonie found support above $0.97 against the greenback, suggesting another test of $0.99. Breach of the rising trendline, however, would indicate another down-swing.

Canadian Dollar/USD

The greenback is testing resistance at ¥100 against the Japanese Yen. The 30-year down-trend of the dollar is over. Breakout above ¥100 is likely, and would suggest an advance to the 2007 high at ¥125*.

USD/JPY

* Target calculation: 100 – ( 100 – 75 ) = 125

The Fed, ECB and BOJ are all printing money and debasing their currencies. The US dollar, although taking on water, is viewed as the safest — because it is sinking slower than the others. There are signs the Fed is likely to slow quantitative easing in the next 6 to 12 months.

Forex: Euro finds support while Sterling, Aussie and Loonie fall

The euro respected primary support at $1.26 on the monthly chart. Follow-through above $1.32 would indicate another test of $1.37, while breakout above $1.37 would signal a primary advance to $1.50. A trough above zero on 13-week Twiggs Momentum would reinforce this. Reversal below $1.26, however, would signal a down-swing to $1.20.

Euro/USD

* Target calculation: 1.35 + ( 1.35 – 1.20 ) = 1.50

Pound sterling respected resistance at $1.53 against the dollar, confirming a down-swing to $1.43*. Declining 13-week Twiggs Momentum, below its 2011 lows, strengthens the signal.

Sterling/USD

* Target calculation: 1.53 – ( 1.63 – 1.53 ) = 1.43

The Aussie Dollar fell sharply, headed or a test of primary support at $1.015. Narrow fluctuation of 63-day Twiggs Momentum around zero suggests a ranging market. Respect of support would suggest another rally to test $1.06.

Aussie Dollar/USD

Canada’s Loonie respected resistance at $0.99 against the greenback. The primary trend is down and breakout below $0.97  would indicate another decline, while breach of $0.96 would strengthen the signal. Respect of $0.96, however, would suggest an advance back to the 2012 high of $1.03; strengthened if resistance at $0.99 is broken.

Canadian Dollar/USD

The greenback is testing resistance at ¥100 against the Japanese Yen. The 30-year down-trend of the dollar is over. Breakout above ¥100 is likely, after brief consolidation/retracement, and would suggest an advance to the 2007 high at ¥125*.

USD/JPY

* Target calculation: 100 – ( 100 – 75 ) = 125

The Fed, ECB and BOJ are all printing money and debasing their currencies. It is a case of which boat is sinking the fastest, and the US dollar, although taking on water, being viewed as relatively safe. The fall of gold reveals the market view that the Fed is likely to tail off quantitative easing in the next 6 to 12 months.

Forex: Euro correction while Aussie retraces

The euro is headed for a test of primary support at $1.26 on the monthly chart. Respect would confirm the primary up-trend, while failure would signal a down-swing to $1.20.
Aussie Dollar/USD

* Target calculation: 1.35 + ( 1.35 – 1.20 ) = 1.50

Pound sterling is testing the new medium-term resistance level at $1.53 against the dollar. Respect would confirm the primary down-trend, with a target of $1.43*. Declining 63-day Twiggs Momentum, below its 2011 lows, strengthens the signal.
Aussie Dollar/USD

* Target calculation: 1.53 – ( 1.63 – 1.53 ) = 1.43

The Aussie Dollar retraced this week to test short-term support at $1.04, but the up-trend is intact and we should expect a test of resistance at $1.06. Failure of support at $1.03 is unlikely, but would warn that primary support at $1.015 is again under threat. Narrow fluctuation of 63-day Twiggs Momentum around zero suggests a ranging market.

Aussie Dollar/USD

Canada’s Loonie rallied off medium-term support at $0.97 against the greenback. Expect some resistance at $0.99, but the CAD is just as likely to test the descending trendline at parity. The primary trend remains down and a test of primary support at $0.96 remains on the cards in the next quarter.
Aussie Dollar/USD

The US dollar is encountering increased resistance as it approaches ¥100 against the Japanese Yen. The 30-year down-trend is over. The advance is extended and a correction likely, but breakout above ¥100 would test the 2007 high above ¥120*.
Aussie Dollar/USD

* Target calculation: 100 – ( 100 – 80 ) = 120