Mizuho Corporate Bank

EUR
Comment: The latest rally has retraced 61% of July’s decline, stalling at the top of the Ichimoku ‘cloud’. Allow for more work below 1.3700 today with immediate upside pressure increasing if we hold above 1.3600.

Strategy: Attempt small longs at 1.3625/1.3600; stop well below 1.3550. Short term target 1.3685 then 1.3850.

EUR/JPY
Comment: Despite its whopping size the collapse from a record high at 169.05 is an A, B, C-type correction where C is just over 1.61 times A. It ended with a massive ‘spike’ low on the weekly candle at the bottom of the Ichimoku ‘cloud’, the 50% retracement level and the psychological 150.00 area. Prices should hold above here for many weeks, maybe months, with many large random swings intra-day and daily. We shall continue with a flexible approach attempting to trade the range. One-month at-the-money implied volatility should hold around the 11.00% level.

Strategy: Possibly attempt small shorts on a bounce to 158.00, adding to 159.00; stop above 160.00. Cover shorts at 154.50 and watch for signs of basing between here and 153.00.

GBP
Comment: The latest bounce has stalled at the 50% retracement level and the bottom of the Ichimoku ‘cloud’. Allow for many random moves either side of 2.0000 for the next few weeks. All dips are seen as long term buying opportunities for a move higher late this year.

Strategy: Attempt small longs at 2.0050, but be prepared to add to 1.9950; stop well below 1.9925. Cover longs ahead of 2.0200.

JPY
Comment: Steadying itself after July’s precipitous decline, holding above pivotal support between 115.50 and 115.00. Allow for random moves between 115.00 and 117.20 today, possibly with a dip to 114.00 late today/tomorrow, followed by a rally to 116.65.

Strategy: Possibly attempt tiny longs at 115.30; stop/reverse below 115.00 for 114.00/113.75. Cover longs ahead of 117.00.