The overall driver to USD currency pairs this week are located in EM currencies as the main EM currencies are severely overbought. Due to overbought USD in the EM space, EM overbought will automatically drive G28 USD currencies lower.
No difference exists to EM and G28 currencies except the currency nation name and exchange rate number. Both G28 and EM markets are the exact same. IF USD trades higher or lower then all EM and G28 currencies trade higher or lower. Same principle for EUR, AUD, NZD, GBP, CHF and JPY.
EM serves its purpose by an extra evaluation for example to USD or EUR currencies. USD/CAD this week is fairly neutral while USD/CHF and USD/JPY are overbought but nothing special to the degree. USD currencies for EM serves the purpose to the degree of overbought or oversold particularly as G28 currencies are dead to movements.
Taken a step further to overbought, USD/BGN is overbought, USD/CZK, USD/IDR, USD/ILS, USD/INR, USD/KRW, USD/NOK, USD/PHP, USD/SEK, USD/SGD, USD/THB.
The factor to overbought or oversold for EM currencies are wide range movements compared to dead ranges for G28 currencies. For EM currencies to reach astronomical overbought or oversold means an extraordinarily distance was traveled.
USD/TRY, USD/ZAR and USD/CNY was excluded from this week’s trade consideration due to fairly neutral positions to begin the week. Also note oversold USD/RUB exclusion.
The commonality to all currencies is movements are dependent on Repo Rates as the nation’s main interest rates. Repo Rates are vastly different to currency price movements than interest rates that predominate the vast amount of nations in our trading world.
Repo Rates are neutral for above nations which is the translation of a neutral currency price.
USD/DKK overbought from the close at 6.2673,
Short anywhere or 6.2715 and 6.2738 to target 6.2389 easily.
USD/HRK overbought from the close at 6.3120
Short anywhere or 6.3187 and 6.3205 to target 6.2970 easily.
USD/HUF from the close at 296.52
Short 296.97 and 297.28 to target 296.06. No thrill here, fairly neutral.
USD/MYR overbought from the close at 4.1635
Short 4.1664 and 4.1692 to target 4.1426.
USD/PLN overbought from the close at 3.8013,
Short Anywhere or 3.8064 and 3.8078 to target 3.7888.
USD/RON overbought from the close at 4.1539
Short anywhere or 4.1566 and 4.1586 to target 4.1244.
USD/BRL from the close at 5.0574
Long 4.9898 and 4.9686 to target 5.0535.
Read More: EM overbought USD and weekly trades