EUR
Comment: Little to add as the Euro is trying to hold above the 50% Fibonacci retracement support and the Ichimoku ‘cloud’. Bearish momentum has halved over the last week and it looks set to remain on the back burner again this week, and note the declining 9-day moving average. We continue to watch for signs of forming an interim low, a daily close above 1.2780 possibly helping.
Strategy: Attempt small longs at 1.2715; stop well below 1.2580. First target 1.2775, then 1.2925.
EUR/JPY
Comment: Interesting how the 26-day moving average is horizontal while the 9-day one is dropping sharply. Let’s see if this causes another serious downside probethis month, here and in a series of other yen crosses. August’s monthly close below 107.00 (105.44) is the lowest since June 2001 and should see downside pressure increase further still. Note the record low is 88.93 in October 2000.
Strategy: Sell at 107.35/107.75; stop above 109.65. First target 106.00, then 105.50, probably 104.50/104.00.
GBP
Comment: Cable continues to try to form an interim base against the 38% Fibonacci retracement; now let’s see if the rising upper edge of the large daily Ichimoku ‘cloud’ helps it higher. A daily close above the 9-day average might help bullish momentum higher, a necessary step as futures open interest is at the higher end of the norm of the last five years.
Strategy: Attempt longs at 1.5415; stop below 1.5300. First target 1.5500, then 1.5700.
JPY
Comment: The lowest monthly close ever (84.11, previously 84.25 in April 1995) and the US dollar is still not oversold against the yen, implied volatility close to its long term mean. However, on balance volume in the futures contract is at a record high on very muted open interest. We continue to prepare for a series of cautious downside probes.
Strategy: Attempt shorts at 84.40; stop well above 85.00. First target 84.00, then 83.50.
