EUR
Comment: Another new recent low at 1.3881, dragged down by EUR/JPY, and in line with many other major currencies. We feel that the moves are caused mainly by the unwinding of ‘carry trades’ in their many guises rather than any sudden new attractions of the greenback. It has collapsed in eight of the last nine weeks, the biggest monthly collapse ever, and the Euro is grossly oversold.
Strategy: Possibly attempt tiny longs at 1.4000; stop below 1.3800. Short term target 1.4200/1.4225.
EUR/JPY
Comment: Yesterday’s slide to a low at 147.52, followed by a sharp bounce, suggests we have done enough for this week. Therefore expect consolidation today as we prepare for another massive slide later this month.
Strategy: Sell at 150.50, but only if prepared to add to 152.50; stop well above 153.60. Short term target 149.25, then 147.55 again.
GBP
Comment: A very unusual chart pattern this week with a recent low at 1.7445: a possible ‘spinning top’ on the weekly chart. Be very careful as the pound is terribly oversold because the dollar is horribly and suddenly overbought. Sterling is doing better against some other currencies.
Strategy: Possibly attempt tiny longs at 1.7600; stop below 1.7400. Short term target 1.7700, then 1.8000.
JPY
Comment: Yesterday’s downside probe was deeper than we had expected underlining the fact that we are in the process of preparing to move to a new lower trading band. We should hold above 106.00 again today due to exhausted traders and nervy investors. Next week we should get going again.
Strategy: Strategy remain unchanged: sell at 107.35, adding to 107.80; stop well above 108.25. Short term target 107.00, then 106.65.
