EUR
Comment: Clinging above this year’s low at 1.2329 and still working unconvincingly in a ‘triangle’; let’s see for how much longer it can do so, remembering to beware of false breaks and extensions. Implied volatility should remain high and may put some off trading the currency, with volume in the futures market surprisingly holding relatively high.
Strategy: Possibly attempt longs at 1.2700 but be prepared to add to 1.2500; stop below 1.2300. First target 1.2800, then 1.2900 and maybe 1.3000.
EUR/JPY
Comment: ‘Triangle’ consolidation should dominate today, postponing any break lower until next week, where the possibility of a ‘gap’ lower over the weekend exists. Later this month we continue to expect a drop to October’s low at 113.62.
Strategy: Attempt shorts at 123.60/124.00; stop above 128.50. First target 122.00 then 118.50.
GBP
Comment: Carnage for the pound as it drops to a record low against the Euro (£0.8675), equivalent to 2.2730 Deutschemarks, just shy of the all-time low of 2.1750 marks set in May 1995. Yesterday’s Cable low at 1.4560 set up a decent bounce within the downward-sloping ‘wedge’ formation. Extreme caution is warranted as one-month at-the-money implied volatility is up at a new record high at 27.75%.
Strategy: Possibly attempt tiny longs at 1.4835; stop below 1.4500. First target 1.5000 then 1.5400.
JPY
Comment: Bouncing more strongly than expected from support at the 61% retracement level and likely to hold above here again today and maybe early next week. Volatility should remain high and may even increase towards month-end.
Strategy: Attempt shorts at 97.15; stop well above 99.55. First target 96.00, then 94.50 again.
