EUR
Comment: Very dreary though still consolidating at the upper edge of the range that has held since late May. The Euro is no longer overbought and momentum is just bullish. We feel that the long term trend to US dollar weakness will resume, if not this month then in October.
Strategy: Attempt small longs at 1.4255; stop below 1.4085. Short term target 1.4350, then 1.4445.
EUR/JPY
Comment: Holding, slightly precariously, below a thin Ichimoku ‘cloud’ and Yen crosses are looking increasingly top-heavy. A drop below 131.00 (either late today or over the weekend) should add to downside pressure, a move which might accelerate causing another sudden slide to the 127.00 area, increasing at-the-money implied volatility.
Strategy: Strategy remains unchanged: sell at 132.00, adding to 132.50; stop well above 133.55. Short term target 131.00, re-selling below 131.00 for 127.00 (and probably a lot more further out).
GBP
Comment: Rallying quietly to the upper edge of a thin Ichimoku ‘cloud’ and there is a small chance that Cable may try and hold above the top of this formation though moving averages do not confirm.
Strategy: Attempt small longs at 1.6345; stop well below 1.6100. First target 1.6380/1.6400, then 1.6600.
JPY
Comment: Bouncing slowly from a low at 91.94 yesterday, ahead of July’s low at 91.73. With a little luck the nine-day moving average will again limit highs leading to a concerted downside test late today. A break below 91.50, possibly with a gap lower over the weekend, should see implied at-the-money volatility increase significantly and increasing bearish momentum.
Strategy: Sell at 92.60, adding to 93.00; stop above 93.55. Short term target 92.00/91.75 with moves below here likely to becoming increasingly erratic.
