Fed Funds trades from 5.33 to 2.51 or a 282 point range. The bottom at 2.51 was derived from the 32 year monthly average and is not absolute because the data ended at 32 months or 384 monthly averages. Speculation to Fed ranges is 5.33 to 3.5 and 3.00 in a range from 183 and 233 points. The level at 3.5 is much preferred at the current 3.4 Inflation rate.
As written, Yearly Inflation at 3.4 contains many miles to the 2% target and no guarantee the target achieves in year 2024. Before every Fed meeting, Powell and the Fed consult the Livingston Survey for yearly and multi year forecasts. The Survey forecasts Inflation at 2.2% by December 2024. The BOJ forecasts 2% Inflation by end 2024.
From 2023 to 1991, December and March stand as most popular months for Fed Funds changes at 14 adjustments for December and 12 for March. November is next at 10 changes and 9 adjustments for September and June while October records 8 changes. May and August factor as 7 changes. The most common adjustments are 25 points.
The end result is interest rate adjustments may occur by end 2024 if any Inflation changes materialize. WTI Oil offers no assistance from the 2024 range at 85.73 to 67.07. The price of Oil for every central bank factors as 40% or 0.4 to all Inflation calculations. Oil requires a massive move lower to compensate for lower Inflation and justification to lower rates.
As the Fed must lead all central banks, on hold to year end 2024 means all central banks remain on hold as high Inflation remains persistent. Except the BOJ.
The BOJ interest rate range for 2023 traded 0.99 to 0.96 and currently trades near the 0.99 highs. The BOJ incorporates easy ability to drop interest rates to the 0.96 level again without moving the headline rate. The BOJ moves ever so slowly and the change will come on a gradual basis.
The BOJ’s April meeting won’t see an interest rate change and regardless to Wages. The BOJ’s negative interest rates remain throughout 2024 as well as Monetary Easing and current placement of YCC bands. No exciting changes for the BOJ in 2024.
Markets remain ranging for 2024 rather than trend. USD/JPY and JPY cross pairs remain the best 2024 trades as well as wide rangers, GBP/NZD, EUR/NZD, GBP/AUD and EUR/AUD.
Next week
The FX Weekly produced roughly 800 pips profit as targets achieved destinations. Reported ranges held such as GBP/USD. NZD/USD dropped by 10 and 15 pips but regained the range.
A trade begins at entry and ends at target. A trade is a mathematical construct and must by no other choice trade to target. Nothing else is required. No stops, Economics, Powell nor the Fed.
EUR/USD higher next week must break 1.0857 to target the big break line at 1.0901. Above 1.0857 trades the range from 1.0857 to 1.0901. EUR/USD at current 1.0700’s trades deeply oversold and long is the only way forward.
EUR/USD long term targets 1.0860, 1.0913 and 1.0985. EUR/USD long term offers confirmation to range markets as the 1.0985 target is barely 200 ish pips.
Overall, EUR/USD traded 108 pips this week and 111 last week.
GBP/USD trades 1.2621 and 1.2634 to 1.2796. Bottoms are located at 1.2558 and 1.2546. GBP/USD trades overbought in middle 1.2700’s and oversold at 1.2534.
AUD/USD at current deeply oversold levels at 0.6525 targets the break at 0.6587 then 0.6608. Long next week targets easily 0.6577.
NZD/USD targets the break at 0.6109 then 0.6156.
USD/JPY Next shorts are located at middle 147.00’s to target the break at 146.62 then 145.00’s. USD/JPY’s first long term target posted early January completed at 146.07. Lows traded at 146.00. Next target is located at 138.01.
GBP/JPY next break for lower is located at 185.21. GBP/JPY trades easy ability to hit 187.00’s for renewed shorts. The overall strategy is short all JPY cross pairs.
EUR/JPY higher must cross above 159.21. Oversold begins at low 158.00’s.
GBP/AUD trades deeply overbough and targets low 1.9200’s. Both EUR/AUD and GBP/AUD are running into serious range problems. GBP/AUD is the better trade.
GBP/NZD goes short in low to middle 2.0800’s and targets the break for much lower prices at 2.0684. Overall next target is 2.0500’s.
EUR/NZD longer term targets 1.7300’s. Next week targets low 1.7600’s.
USD/CAD traded 107 pips this week. Higher must break 1.3470.
EUR/USD vs DXY next week
EUR/USD 1.0841 Vs DXY 103.27.
EUR/USD 1.0862 Vs DXY 103.06.
EUR/USD 1.0905 Vs DXY 102.63.
Long term
EUR/USD 1.1012 Vs DXY 101.56.
EUR/USD 1.1119 vs DXY 100.49.
EUR/USD 1.1226 Vs DXY 0.9942.
Not only 2 trades offered but every market price on the planet.