Mizuho Corporate Bank

EUR:
Comment: The A, B, C-type correction from the all-time high at 1.3853 has retraced 61% of the previous rally and C is 1.6 times the size of A. The Euro is very oversoldand needless to say implied volatility is a lot higher. Futures positions have been trimmed a little and may be cut further as we move towards expiry next month. We shall be watching for signs of basing around 1.3500; this may take several days.

Strategy: Possibly attempt tiny longs at 1.3485; stop below 1.3450. Cover around 1.3700/1.3725.

EURJPY:
Comment: The sell-off is even bigger than the March one and has lasted twice as long. Yet trendline and Ichimoku ‘cloud’ support might stem this collapse which is seen as an A, B, C-type correction where C equals A. The Euro is very oversold against the yen. Wait and watch for signs of basing, probably with a massive ‘spike low’.

Strategy: Possibly attempt tiny longs at 157.40; stop below 156.50. Cover longs at 160.00.

GBP:
Comment: Lots of nervy people as we drop below 2.0000. Cable is very oversold and implied volatility is back up to 8.00%, the mean of the last twelve years. Wait and watch for an interim low to form over the next week or two.

Strategy: Possibly attempt tiny longs at 1.9880; stop well below 1.9800. Cover longs at 2.0150.

JPY:
Comment: Dipping below the psychological level at 117.00 this morning yet downside pressure has eased. The US dollar is slightly oversold against the yen and one-month at-the-money implied volatility has exploded to 12.00%. Hopefully we will try and stabilise above 117.00 this morning.

Strategy: Possibly attempt tiny longs at 117.00; stop/reverse below 116.90 for 116.50/116.25. Cover longs ahead of 118.75.