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As is so often the case with the Yen, this is a major slap on the wrists for the unwary

Wed, Feb 28 2007, 08:05 GMT
by Nicole Elliott

Mizuho Corporate Bank


EUR

Comment: At last moving above the top of the ‘flag’ pattern and some time hopefully this week we favour a test of important long term resistance at 1.3300. At this point many will have to review their FX ideas. Implied volatility should pick up from a record low around 5.40% towards 7.00%.

Strategy: Buy at 1.3200, adding to 1.3150; stop below 1.3080. Short term target 1.3250, then 1.3300.

EUR/JPY

Comment: Scary but still within acceptable retracement parameters. We now favour several weeks of backing and filling below the all-time high. Very long term while above 150.00 we shall still allow for a final upside massive squeeze.

Strategy: Possibly attempt small longs at 156.25, adding to 155.50; stop below 155.00. Cover ahead of 158.00.

GBP

Comment: Unbelievably boring amid the turmoil in other markets. In the middle of the range of the last few months and above a fat Ichimoku ‘cloud’. Over the coming week/fortnight we favour yet another upside test of 1.9700/1.9750, with a sustained break above the 26-day average at 1.9660 adding a little upside pressure.

Strategy: Buy at 1.9565; stop well below 1.9500. Short term target 1.9650, then 1.9750.

JPY

Comment: As is so often the case with the Yen, this is a major slap on the wrists for the unwary. Over the coming weeks we currently favour big swings either side of118.00, say roughly between 116.00 and 120.00. However, we cannot rule out another sharp collapse to 114.00 before lengthy attempts at stabilising above here.

Strategy: Attempt shorts on a bounce to 119.00 but be prepared to add to 120.00; stop above 120.60. Short term target 117.50, maybe 116.70.

Published on  Wed, Feb 28 2007, 08:13 GMT


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Mizuho Corporate Bank  | 1-3-3, Marunouchi, Chiyoda-ku, Tokyo 100-8210
http://www.mizuho-cb.co.uk | Nicole.Elliot@mhcb.co.uk

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