Mizuho Corporate Bank

EUR
Comment: Mercifully contained amid the chaos in so many different markets. Consolidation below the record high at 1.3853 should continue for another week at least. At the moment we are nearly managing to hold above 1.3700 but a deeper correction must be allowed for. This is possible next month and would probably shatter the nerves of recent converts to US dollar weakness. For today allow for random small moves around current levels.

Strategy: Possibly attempt small longs at 1.3735; stop below 1.3690 and wait for signs of basing. Target 1.3750/1.3775.

EUR/JPY
Comment: Dropping further in a week than many might have feared yet it is still very much in corrective mode. However, there is no point trying to catch a falling knife so wait for tentative signs of basing around 162.00 or maybe 160.00. At-the-money one-month implied volatility has rocketed to 9.00% and should top between here and 10.00%. We shall continue with a very cautious stance and be prepared to turn positions as necessary as we move into consolidation and possibly a deeper correction mode.

Strategy: Possibly attempt tiny longs at 162.25/162.00; stop below 161.50. Cover longs at 164.00 and sell at 166.00/167.00; stop above 169.05.

GBP
Comment: Pulling back steadily from 2.0656 and likely to hold below here at least until month-end. The question now is how deep will pullbacks be, noting that the first retracement level is not until 2.0260, which is probably more than recent converts can afford. This morning we will try to hold rather unsteadily at 2.0400 but some time today allow for a dip towards 2.0345 before a slow bounce.

Strategy: Possibly attempt small longs at 2.0200; stop well below 2.0400. Target 2.0550.

JPY
Comment: Classic Yen price action: creeping higher since early March then slapped down again in just three weeks. It is terribly oversold but who cares when all markets are in turmoil and investors and traders are barely able to keep up with the order flow. Needless to say one-month at-the-money implied volatility has exploded to 9.00% as we had expected, and should now top between here and 9.50%. For today expect some consolidation between 118.00 and 119.50, where short squeezes to 120.50/121.00 (and no higher than 122.22) are seen as selling opportunities.

Strategy: Attempt small shorts at 119.00 but be prepared to add to 120.50; stop above 122.25. Cover half of shorts at 118.10 and the other half ahead of 116.50.