EUR

Comment: Three consecutive days of consolidation in a tiny range at the very top of this year’s range. The Euro is not overbought (though bullish momentum could be stronger) so expect another burst higher hopefully today because a weekly close above 1.4400 (highest since September ) should cause another round of short-covering next week. Our measured targets are 1.4600 and eventually the psychological 1.5000.

Strategy: Attempt longs at 1.4350; stop well below 1.4200. Short term target 1.4435, then 1.4545 and after that 1.4635.


EUR/JPY

Comment: Great excitement in many camps who embrace the ‘risk taking’ concept as several Yen crosses squeeze to new highs for the year. Our contrarian mindset welcomes this and strengthens our resolve that what we are seeing is an imminent top building. We shall try and stay calm and wait until we see the whites of their eyes. Yesterday’s ‘shooting star’ candle and declining bullish momentum adds weight to our view.

Strategy: Attempt small shorts at 136.85/137.25; stop above 138.00. Add to shorts on a sustained break below 136.00 for 133.50.


GBP

Comment: Yesterday’s drop feels very big because of the previous two days of tiny ranges but it has done wonders for the overbought situation. The almost 3 cent move is the same size as Monday’s rally and well within the scope of daily moves over the last ten weeks. Allow for a rather nervous probe of the top of the ‘triangle’ and the 9-day average at 1.6691 and Fibonacci support today. Watch for a reversal candle to form (marking an interim low) setting off for another short squeeze next week and certainly throughout August.

Strategy: Buy at 1.6765; stop well below 1.6700. First target 1.7000/1.7044 again, then 1.710/1.71250 and after that 1.7500.


JPY

Comment: Same old, same old: nothing to add as we continue to struggle above moving averages and below a descending Ichimoku ‘cloud’. Be careful as many of these look over-extended. The Lagging Span is just under the candles which drop dramatically over the next three days. We continue to favour generalised US dollar weakness and therefore eventually dollar/yen ought to move lower.

Strategy: Attempt shorts at 95.45; stop above 96.25. Short term target 94.45, then 93.00.