EUR
Comment: Wake-up time as the Euro manages one of its strongest weekly closes since October though within normal retracement parameters. As we move towards the pivotal 1.4200 area we feel that implied volatility should leap higher (and bullish momentum too).
Strategy: Buy at 1.3985 but only if prepared to add to 1.3800; stop well below 1.3700. Short term target 1.4050, then a lot more with a first measured target at 1.4200 then 1.4550.
EUR/JPY
Comment: Not exactly going according to plan as prices break above a very large Ichimoku ‘cloud’. Therefore we now favour a slow sideways move over the next week or two, here and in a whole range of other Yen crosses.
Strategy: Possibly attempt small shorts at 132.50; stop above 133.75. Add to shorts on a sustained break below 131.00 for 129.50 short term.
GBP
Comment: Clearly the strongest weekly close since November though still well within retracement parameters from 2007’s high. Moving averages have turned bullish, implied volatility likewise, and bullish momentum is increasing.
Strategy: Buy at 1.5900, adding to 1.5750; stop well below 1.5500. Add to longs on a sustained break above 1.5955 for 1.6100/1.6200 short term.
JPY
Comment: Difficult price action last week ending with a ‘doji’ candle, at retracement support, with the lowest weekly close since late February. Open interest in the futures contract is running at about one third of 2007’s peak, underlining the disillusion with the ‘carry trade’. Implied volatility is expected to pick up over the next two weeks as prices look for direction. We continue to favour a move lower.
Strategy: Attempt small shorts at 94.80 but only if prepared to add to 96.00; stop above 97.00. First target 93.55, then 92.50.
