EUR

Comment: Nudging fractionally higher, in line with several other currencies. The Euro is very overbought but bullish momentum is stronger than it has been since May. Note that at-the-money implied volatility has exploded from record lows earlier in the month and futures positions are being rebuilt. Our first upside target at 1.3200 has been met and there is a chance of touching 1.3400 this month if we hold above 1.3000.

Strategy: Attempt small longs at 1.3150, adding to 1.3100; stop below 1.3000. Short term target 1.3200, above 1.3220 should set off another flurry of buy stops are likely to be triggered taking the Euro to 1.3400.

EUR/JPY

Comment: Rallying to a new all-time high at 153.43 today and retreating. Prices are likely to hold below here this morning and probably all day. If we can hold above 151.80 again today there is still a chance of hitting 155.00 this month, at which point we favour a decent bout of consolidation.

Strategy: Possibly attempt small longs at 152.50, adding to 152.00; tight stop below 151.70. Short term target 153.25, then 154.00 and eventually 155.00.

GBP

Comment: Many watching this one, some not exactly believing what they are seeing, as Cable trades at some of the highest levels in twenty years. Today’s high at 1.9546 is just a few tiny pips below the December 2004 high of 1.9552. Generally while above 1.9200 the line of least resistance is upwards, despite being at scary levels. However it will not be plain sailing and there are likely to be big price swings.

Strategy: Possibly attempt tiny longs on a dip to 1.9400, adding to 1.9300; stop below 1.9200. Short term target 1.9550, then watch carefully for strong weekly and especially monthly closes.

JPY

Comment: Downside pressure here, and in all other currencies against the US dollar, is far greater then we had thought and this pair did not even manage a squeeze above 116.50. While below here downside pressure should increase for a subsequent move lower to 114.00 and maybe 113.45. The dollar is only slightly oversold and momentum is bearish.

Strategy: Sell on a bounce to 116.00/116.25; stop well above 116.50. Short term target 115.50, eventually 114.00.