GBP/USD
Support 1.9450..1.9400..1.9300..1.9260.
Resistance 1.9600..1.9700..1.9750..1.9850.
Rather boring as we consolidate in the middle of the broad band that has limited price action since December. Momentum is nil so no wonder at-the-money implied volatility has drifted. Open interest is well below December’s record, suggesting some have taken fright and taken cover at these historically very high levels. This should ensure that the fairly sharp intra-day swings continue for another few weeks, with prices probably holding between 1.9450 and 1.9750 most of the time. Moving averages are mixed because we have crept sideways for so long but hopefully a rather fat Ichimoku ‘cloud’ will provide the support for a re-test of critical resistance early in March.
EUR/GBP
Support 0.6666..0.6600..0.6550..0.6534.
Resistance 0.6740..0.6760..0.6800..0.6850.
The rally from January’s dip to 0.6534, just below pivotal key long term support at 0.6550, has brought prices back within the broad trading band of the last four years (0.6700 to 0.7000). So long as we hold below 0.6760 the chart will maintain the series of lower highs that has been in place since July last year. However, there is a good chance that prices will actually creep sideways over the next few weeks roughly between 0.6660 and 0.6800. Note that the Euro is very overbought today but only in the context of a currency pair that is really going nowhere. Interestingly over the last month the pound has lost weight against all major currencies except the Swedish krona, underlining their status as ‘quasi Euros’.
EUR/JPY
Support 156.50..156.00..155.25..154.40.
Resistance 157.80..158.00..158.60..159.00.
Last week’s sell-off feels big because it is in contrast to the relentless upward pressure of the last months. It is well within normal retracement parameters and of a similar magnitude as the early January one. We feel it heralds a period of correction and consolidation that is likely to last for a few weeks. Dips to 156.50, and hopefully no lower than 154.40, are seen as buying opportunities. We remind that the move to Yen weakness is very mature, having started in 2001, and the final stages of any rally this big are not the time for aggressive positioning, even if the moves can be very fast and take prices a very long way. Momentum is neutral and the Euro is not oversold. Futures positions are below December’s record.
GBP/JPY
Support 232.00..231.40..230.6..229.00.
Resistance 234.80..235.60..238.00..239.00.
Having consolidated extremely neatly for the last three weeks Thursday’s sell-off comes as a bit of a surprise. Nevertheless we are well within normal retracement parameters and prices should try and form an interim base against support at 232.00. This is a 50% retracement level and we have an increasingly fat Ichimoku ‘cloud’ which should provide some underlying support. The pound is more oversold than it has been since February 2006 but momentum is negative. However, note that this pair is extremely expensive and nothing down to 227.00 even begins to look ‘cheapish’ for a long term investor. One-month at-the-money implied volatility is way above the record low of 4.60% and should hold above 7.00%.
GBP/USD
Support 1.9450..1.9400..1.9300..1.9260.
Resistance 1.9600..1.9700..1.9750..1.9850.
Rather boring as we consolidate in the middle of the broad band that has limited price action since December. Momentum is nil so no wonder at-the-money implied volatility has drifted. Open interest is well below December’s record, suggesting some have taken fright and taken cover at these historically very high levels. This should ensure that the fairly sharp intra-day swings continue for another few weeks, with prices probably holding between 1.9450 and 1.9750 most of the time. Moving averages are mixed because we have crept sideways for so long but hopefully a rather fat Ichimoku ‘cloud’ will provide the support for a re-test of critical resistance early in March.
EUR/GBP
Support 0.6666..0.6600..0.6550..0.6534.
Resistance 0.6740..0.6760..0.6800..0.6850.
The rally from January’s dip to 0.6534, just below pivotal key long term support at 0.6550, has brought prices back within the broad trading band of the last four years (0.6700 to 0.7000). So long as we hold below 0.6760 the chart will maintain the series of lower highs that has been in place since July last year. However, there is a good chance that prices will actually creep sideways over the next few weeks roughly between 0.6660 and 0.6800. Note that the Euro is very overbought today but only in the context of a currency pair that is really going nowhere. Interestingly over the last month the pound has lost weight against all major currencies except the Swedish krona, underlining their status as ‘quasi Euros’.
