DXY September range was 96.79 to 95.13 while October factors to 96.70 to 95.52. The topside dropped 9 pips while the bottom rose 39 pips in an overall 118 pip range. The top of the monthly range at 97.46 translates to EUR/USD 1.1080’s. DXY will seriously struggle from 97.01 to 97.46 upon a 96.70 break. To travel higher, DXY must cross 95.51, 95.62, 95.86, 96.48 and 96.62. Then begins 97.01, 97.05, 97.20, 97.30 and range top at 97.46.

DXY bottom average at 95.13 is reinforced by 95.18 and 95.10. A break of 95.10 targets next 94.70, 94.66, 94.51, 94.25 and begins 93.00’s at 93.98. DXY 94.00’s translates to EUR/USD upper 1.1300’s.

EUR/USD September’s average was located from 1.1364 to 1.1100 while October is found from 1.1294 to 1.1106, a 188 pip range. The October topside dropped 60 pips from September while the bottom rose 6 pips. EUR/USD brick walls for October above 1.1294 are located at 1.1307, 1.1394, 1.1435, 1.1469 and 1.1554. EUR/USD travels higher by breaks at 1.1226, 1.1237, 1.1279 and 1.1282. Top of the channel at 1.1801 is down 83 pips from September’s 1.1884.

EUR/USD downside is solid at 1.1101, 1.1095, 1.1081, 1.1028, 1.1016, Then begins 1.0924 and 1.0871.

To repeat from last month and viewed from the 1 year trend line, the line is almost completely horizontal and both DXY and EUR/USD trade below. Any price rises and even exhorbitant rises is a correction for both DXY and EUR/USD. DXY and EUR/USD trade below the 2 year descending trend line and each hug middle portions of the lines from 2 to 10 years and every year in successive order.

Most important is topside trend lines for both DXY and EUR/USD in monthly averages 1 to 10 years continues to drop slowly every month and contains price rises. Because both DXY and EUR/USD trade below or hug trend lines, bottoms rise due to oversold price conditions . If a bottom line drops then the topside must rise and as this continues month to month, trend lines are heading to complete vertical. At some point a reversal must be seen but its not evident anytime soon.

Further problem to the EUR/USD story is correlations run negative 52% to EUR/JPY, negative 38% to EUR/AUD, negative 59% to EUR/NZD while EUR/GBP runs best positive correlations at + 60%, + 11 to EUR/CAD and +27% to EUR/CHF. EUR/USD on its own volition lacks ability to run on all cylinders to its cross pairs.

Intraday and for the week, most important lines to watch are 1.1174 and 1.1210. Both must break to see EUR/USD downsides to 1.1095 and 1.1080’s yet both lines as support takes EUR/USD higher. What is seen for the month is more of the same ranges and not a breakout.

Brian Twomey