EUR
Comment: Nasty intra-day moves as the Euro thrashes around trying to break out of the downward-sloping ‘wedge’ formation. Be careful because as and when sentiment shifts moves could be very large and indiscriminate. A daily close above the 26-day moving average at 1.2920 might turn momentum decidedly bullish.
Strategy: Attempt longs at 1.2825, adding to 1.2700; stop well below 1.2600. First target 1.2875 then 1.3000.
EUR/JPY
Comment: All Yen crosses are rallying, many through rather thin Ichimoku ‘clouds’, forcing a sudden re-think on Japan plc. If we can hold above 122.20, roughly the mid-point of the band that has held since October, the next obvious move is for a squeeze up to trendline resistance at 128.50 and probably December’s high at 131.02.
Strategy: Attempt longs at 124.35 but only if prepared to add to 122.25; stop well below 121.50. First target 125.00, then 127.75/128.50.
GBP
Comment: Trying and holding up better than some other currencies as it re-tests trendline resistance and a very thin Ichimoku ‘cloud’, but really needs support from some other major currencies. In what could be a terribly explosive move, and in complete contrast to the cautious dips we have seen since November, we expect a break higher this week and one must prepare for daily rallies of several cents.
Strategy: Buy at 1.4545, adding to 1.4400; stop below 1.4150. Short term target 1.4660 then 1.4985.
JPY
Comment: Scampering up a lot faster than we had imagined, probably because the move has taken so many by surprise. The US dollar is overbought but bullish momentum is the strongest in years. While we may have done enough for this week some time in March we continue to favour a squeeze to 98.00/98.50 or so.
Strategy: Attempt tiny longs on a dip to 96.50; stop well below 95.00. First target 97.35, maybe 98.50.
