EUR

Comment: Testing the top of a potential ‘rounded bottom’ as we break ‘channel’ resistance by moving sideways across the page. Moving averages have crossed to bullish and economists favour US dollar strength because the American economy will recover sooner than anybody else’s. Time for a serious short squeeze.

Strategy: Buy at 1.3785, adding to 1.3665; stop below 1.3500. Add to longs on a sustained break above 1.3800 for 1.3840, then 1.3900, then 1.4000.


EUR/JPY

Comment: Re-testing the 125.00 area, the upper edge of the range since February and retracement resistance. The daily Ichimoku ‘cloud’s’ lower edge lies at 125.65 and widens very significantly starting this Monday. Note however that moving averages have turned bullish so very mixed signals – something we would expect for a market that is likely to go sideways for another month or so. Continue to trade the range.

Strategy: Sell at 124.90; stop above 125.65. First target 123.80, then 122.00.


GBP

Comment: Sterling, this week’s best performing currency as the media write it off because of the looming election. Cable continues to work in a potential ‘flag’ formation though the 9-day moving average has created a massive ‘bullish engulfing’ candle yesterday. We still feel it is trying to form an important medium term low point, but remains very vulnerable here, and against all other currencies, to a sudden very large ‘spike’. A daily close above the 26-day average at 1.5300 should set up for a short squeeze to the thin point of the Ichimoku ‘cloud’ at 1.5600 early April.

Strategy: Attempt longs at 1.5250, adding to 1.5100; stop below 1.4950. Add to longs on a sustained break above 1.5265 for 1.5300 and then more.


JPY

Comment: Trapped between the bottom edge of the Ichimoku ‘cloud’ and the 9-day moving average which are limiting the downside and the recent high at 91.09. Expect a little more hesitation at current levels this morning noting that the very thin ‘cloud’ is unlikely to work either for bulls or bears. Note that while open interest is increasing smartly it remains a fraction of 2007’s peak.

Strategy: Sell at 90.65; stop above 91.15. First downside target 90.00, then 89.30/89.00