EUR
Comment: Very dreary as the Euro is not pulling its weight and continues to hover around the 50% retracement level and the bottom of the Ichimoku ‘cloud’. Futures volumes are still below average and open interest continues to drop. Only a sustained break above 1.3065 will set off a few light buy stops and would hint that an interim low is in place.
Strategy: Attempt longs at 1.2960/1.2925; stop below 1.2850. Short term target 1.3000 then 1.3050.
EUR/JPY
Comment: Pulled higher by some of the stronger Yen crosses (GBP/JPY, SGD/JPY and BRL/JPY) but still below this year’s record high (158.06). For this morning expect a cautious upside probe towards here, noting that upside momentum is surprisingly low.
Strategy: Possibly attempt tiny shorts at 157.00; stop/reverse above 157.35 for 158.00. Short term target 156.00, maybe 155.50.
GBP
Comment: A shame it did not manage to close above the top of the large ‘flag’ formation because other currencies have not helped it higher. Allow for more work under 1.9750 this morning, with dips hopefully holding above the 1.9650 area.
Strategy: Attempt longs on a dip to 1.9675 but be prepared to add to 1.9600; stop well below 1.9550. Short term target 1.9750, then December’s high at 1.9849.
JPY
Comment: Nudging fractionally higher yet again to 121.11 because there are few good chart levels in this area and the Bank of Japan leaves rates unchanged at 0.25%. The highest price since December 2005 (where the high was 121.40 and then it collapsed to 115.52 in one week) and the US dollar is very overbought. We continue to urge extreme caution as the move may well create a ‘spike high’. For this morning allow for more work above 120.50 and below 121.40.
Strategy: Possibly attempt tiny shorts at 121.00; stop above 121.40. Short term target 120.00/119.75.
