The currency pairs on which we focus reached our long-time targets on Tuesday. While good for the ego, it’s always a mixed bag for yours truly. It means a broad reassessment of the path forward at a time when the signposts are not terribly clear.

First, a recap. EURUSD indeed reversed after reaching our 1.1273 target last July [see: July 18 Update] and obliged us by dropping to test our downside target at 1.0658.  From that post:

And, the price action since:

Note that EURUSD has dropped through that original 200-day moving average and has continued lower.

continued for members…First a quick overview of the rest of the market as we approach the open.

I’ll be back to continue the currency commentary after a lengthy conference call.

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Ok, back now. Note that EURUSD has obey several channels over the years. The rising white channel clearly broke down in 2022, leaving just the rising yellow channel, the falling red channel and the shorter falling purple channel. Since we prefer intersections as target prices, the most appealing targets are the intersection between the falling white internal trend line and the rising yellow channel bottom at .9428 in Mar 2024, the .9117 target (purple .886) and the .8449 target (yellow .786.)

If things really go to hell in the eurozone, there’s a very interesting intersection at the yellow .886, rising purple channel bottom and falling red channel bottom in Apr 2029.

At this point, my gut tells me that if the EURUSD drops back below the .9535 lows, we should probably expect .9917-.9212 and then .8449 – a nice scenario for anyone who daydreams of retiring in the Algarve unless the conditions leading to a collapse in the euro make such a move unwise (yes, the Ukraine-Russia war could escalate.)

I’m running out of steam, so will address USDJPY and possibly DXY tomorrow morning.