EUR
Comment: Pushing up against important resistance at 1.4200 after one of the biggest monthly moves on record. A break above here should set off a wave of short-covering taking the Euro up to 1.4600 and probably 1.4800 within a matter of days. The Euro is overbought but bullish momentum is at a record high.
Strategy: Buy at 1.4125, adding to 1.4000; stop well below 1.3900. Short term target 1.4170/1.4200, then a lot more with a first measured target at 1.4550.
EUR/JPY
Comment: Redrawing the large ‘triangle’ following Friday’s ‘doji’. The cross should hold below 135.50 today and possibly all week but note that this in not the predominant trend. In fact Yen crosses are expected to move broadly sideways for most of this year, picking intermediate turns a thankless and difficult task.
Strategy: Attempt small shorts at 134.50, adding to 135.00; stop above 135.75. Short term target 133.00.
GBP
Comment: One of the biggest ever monthly rallies as Cable retraces 38% of last year’s decline. It also adds weight to our view that US dollar strength late last year was due to recapitalisation of core businesses around the globe as cheap money disappeared. Chart levels between 1.6000 and 1.7000 are myriad but not very clear so expect messy work and another potentially stellar monthly rally in an atmosphere of chronic US dollar weakness.
Strategy: Buy at 1.6195, adding to 1.6100; stop below 1.5750. Add to longs on a sustained break above 1.6250 for 1.6400 short term, then 1.6500.
JPY
Comment: Dropping sharply from the middle of a very large Ichimoku ‘cloud’ and should now hold below the 26-day moving average at 96.83. This should set up for a re-test of fairly pivotal support between 94.00 and 94.50 amid what is expected to be generalised, and possibly extreme, US dollar weakness.
Strategy: Attempt small shorts at 95.25, adding to 96.00; stop above 97.35. First target 94.70, then 94.00.
