Monthly Outlook for EUR

Comment: When headlines scream, ‘ten days to save the Euro’, Mark Twain’s note, ‘reports of my death are greatly exaggerated’ springs to mind. At 1.3500 it is trading exactly at the same level as it was when the financial system started creaking in the summer of 2007. Since May 2010 it has held in a sort of massive ‘flag’ formation, last week’s close below the bottom of the weekly Ichimoku ‘cloud’ very disappointing. We are currently watching for this A, B, C-type correction to find an interim base and trade back up inside the large rising ‘cloud’. Only a monthly close above 1.4500 would put this year’s struggles behind it, something which looks unlikely between now and year-end.

A weekly close below 1.3300 will probably force a review.


Monthly Outlook for GBP

Comment: Beaten down from the top of a massive weekly Ichimoku ‘cloud’, closing just below it last week; rather worrying but Cable has managed to bounce from this area already twice this year. Allow for more consolidation this month, prices likely to hold between 1.5500 and 1.6300. Only weekly and monthly closes above 1.6500 will allow sterling to make significant gains, something that is unlikely before year-end.

A weekly close below 1.5400 would force us to adjust.


Monthly Outlook for JPY

Comment: Another round of intervention last month and still dollar/yen remains resolutely within the narrow ‘channel’ that has dominated since May 2010, all aspects of the weekly Ichimoku ‘cloud’ chart continuing to suggest a short position as they have done since July. Hopefully the 26-week moving average at 78.40 will cap this week nudging prices back down to 77.00, maybe 76.25. In thin year-end conditions we shall continue to expect a managed drop to 74.50, maybe 73.50; obviously prices might spiral out of control, which is looking unlikely at the moment.

A weekly close above 80.00 would hint at a long period of broadly sideways price action above the record low 75.31.


Monthly Outlook for EUR/GBP

Comment: Hovering for a fourth consecutive week under the old ‘channel’ at the bottom of the weekly Ichimoku ‘cloud’. We still feel support just ahead of 0.8500 should give way, pushed down by the moving averages that suggest a short position. While below 0.8700 (roughly) we shall continue to allow for a drift down to 0.8400 towards year-end.

A weekly close above 0.8800 forces us to review.


Monthly Outlook for EUR/JPY

Comment: Yen crosses have endured another nervy month, caught between September’s scary downside probes close to record lows and October’s ‘spike highs’. Price action can best be described as much-needed consolidation, maybe in a ‘triangle’, at these very low levels, and an attempt to regroup and form a base. We favour another month roughly within last month’s extremes though another downside probe cannot be ruled out as all aspects of the weekly Ichimoku ‘cloud’ chart still suggests a short position.

A weekly close above 108.00 would probably trigger a short squeeze to 114.00.


Monthly Outlook for GBP/JPY

Comment: Having retreated from October’s ‘spike high’ and a resolutely bearish weekly Ichimoku ‘cloud’ this pair appears to have gathered a little support from the top of the ‘channel’ and 78.6% retracement. We favour another small bounce this month to the 126.00 area but cannot rule out yet another subsequent downside probe.

A weekly close above 126.50 would probably hint that a more lasting low might be in place.