EUR

Comment: The strongest weekly close so far this year but still below the top of the ‘flag’ pattern. If not today then some time this week we favour a break above here to test more important long term resistance at 1.3300. Note that the Euro is not overbought and that open interest is still well below the record highs of late last year so a lot of position rebuilding still needs to be done.

Strategy: Buy at 1.3140/1.3100; stop well below 1.3050. Short term target 1.3170, then 1.3300.

EUR/JPY

Comment: Last week’s sell off here, and in many Yen crosses, feels very big only because it is such a contrast after the bull run of the last three months. It is still very much within normal correction and consolidation parameters and crosses are currently trying to base against the 156.00 area. We expect prices to hold below the all-time high this week and maybe until the end of March, so there is no need to rush in a buy more. For today we favour random moves roughly between 155.80 and 157.80.

Strategy: Attempt small longs on another dip to 156.70/156.40; stop below 156.00. Cover ahead of 158.00.

GBP

Comment: Lagging this week’s strongest (New Zealand, South Africa and Norway) as we move randomly in the middle of the broad trading band in place since late November. Over the coming week/fortnight we favour yet another upside test of 1.9700/1.9750.

Strategy: Buy at 1.9545/1.9495; stop below 1.9400. Short term target 1.9600/1.9650, then 1.9750.

JPY

Comment: A large ‘bearish engulfing’ candle on the weekly chart, completing a ‘broadening top’, and below the pivotal 120.00 level. This suggests that the move above 120.00 is some sort of ‘extension’ and that prices will hold below 122.20 for the rest of this quarter. The question now is it will move down slowly, with lots of consolidation either side of 118.00, or whether we will collapse to the 115.00 area as we did in December 2005. Very good volume on Thursday and more position-trimming suggests too many were short of the Yen. For this morning expect prices to consolidate above 119.00 with rallies probably caped just below 120.00. Then down to 118.50 and 118.00.

Strategy: Sell at 119.35/119.55; stop well above 120.38. Short term target 119.00 then 118.55.