EUR
Comment: The Euro is consolidating after retracing 38% of previous declines and futures positions have been slashed. For today, and the rest of this week, we favour cautious work roughly between 1.4600 and 1.4900. A weekly close above 1.5000 would be very bullish indeed forcing many into slashing newly placed dollar longs.
Strategy: Buy at 1.4700, adding to 1.4625; stop well below 1.4600. Short term target 1.4800, then 1.4900.
EUR/JPY
Comment: Bouncing in a potential ‘flag’ formation and consolidating at the 38% retracement level. While we still favour cautious topping activity this week and next prior to another downside test next month, there is a chance of another short squeeze to the 158.00 area before topping.
Strategy: Possibly attempt very small shorts at 155.70; stop well above 157.05. Short term target 155.00, then 154.00.
GBP
Comment: Working inside a potential small ‘flag’ formation. Expect a little more work within this today prior to another move higher later this week or next week. Cable will probably lead other currencies.
Strategy: Buy at 1.8575, adding to 1.8475; stop well below 1.8400. Short term target 1.8640, then 1.8800.
JPY
Comment: Consolidating neatly below retracement resistance and the Ichimoku ‘cloud’ as the FX market takes a back seat and interbank lending dries up further. Momentum is neutral, implied volatility has retreated from very high levels, and futures positions down sharply. For today while below 106.50 we favour a drift towards 104.50 very late today/tomorrow. Over the next month or so we see rallies, which will probably be capped around 108.50, as selling opportunities for a re-test of 104.00, and then a lot lower, later this year.
Strategy: Sell at 105.80 adding to 106.35; stop well above 107.00. Short term target 105.50/105.15, then 104.00.
