EUR
Comment: Surely we cannot hold inside this rather nasty ‘triangle’ for how much longer, and remember this currency pair may be subject to ‘false breaks’. Therefore implied volatility should remain high.
Strategy: Attempt longs at 1.2600; stop below 1.2300. First target 1.2700, then 1.2800.
EUR/JPY
Comment: Moving into the apex of ‘triangle’ so obviously than chance of crashing through trendlines increases. The first move outside the lines might be in the ‘wrong’ direction. Later this month we continue to expect a drop to October’s low at 113.62 and then some more.
Strategy: Attempt shorts at 122.00, adding to 124.00; stop above 128.50. First target 120.20 then 118.55.
GBP
Comment: Clinging above Thursday’s low at 1.4560 within the downward-sloping ‘wedge’ formation as Asian currencies are attacked instead. Extreme caution is warranted as one-month at-the-money implied volatility is at 26.75%, just shy of last week’s record high at 27.75%.
Strategy: Attempt small longs at 1.4990; stop below 1.4500. First target 1.5080 then 1.5200.
JPY
Comment: Hanging on in there and looking slightly precarious. Later this week we favour a break lower here and in all versions of the ‘carry trade’. Volatility should remain high and may even increase towards month-end.
Strategy: Sell at 96.50, adding to 97.50; stop above 98.85. First target 96.00, then 94.50 again.
