EUR
Comment: Consolidating at the very top of this year’s range in a potential ‘pennant’ formation. Surprisingly the Euro is not overbought so expect another burst higher hopefully by the end of this week. Our measured targets are 1.4600 and eventually the psychological 1.5000.
Strategy: Strategy remains unchanged: attempt longs at 1.4385, adding to 1.4310; stop well below 1.4200. Short term target 1.4430, then 1.4545 and after that 1.4635.
EUR/JPY
Comment: Hovering slightly precariously at some of this year’s highest levels, overbought with declining bullish momentum. Who knows where it will end, but it will be messy, and we are very wary of upside breaks in some other currency pairs (namely AUD/JPY, BRL/JPY, CAD/JPY, NOK/JPY and NZD/JPY. Stand aside if possible.
Strategy: Possibly attempt tiny shorts at 136.50; stop above 137.75. Short term target 134.50.
GBP
Comment: Perched just under the psychological 1.7000 level as many look on in amazement at the pound. Our measured targets remain at 1.7100 then 1.7500. Careful though as it is almost overbought and bullish momentum is not nearly as strong as many would hope or expect.
Strategy: Attempt longs at 1.6910 but only if prepared to add to 1.6750; stop well below 1.6600. First target 1.7000 again, then 1.7100 and after that 1.7500.
JPY
Comment: Nothing to add as we continue to struggle above 94.00 and below a descending Ichimoku ‘cloud’, though note there is much excitement and talk of the ‘carry trade’ as some Yen crosses squeeze to new highs for the year. Be careful as many of these look over-extended. We continue to favour generalised US dollar weakness and therefore eventually dollar/yen ought to drop lower.
Strategy: Attempt shorts at 94.85/95.25; stop above 96.00. Short term target 94.15, then 93.00.
